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Sustainability via Intergenerational Transfers in a Stock‐Flow‐Consistent Model
Author(s) -
Rosenbaum Eckehard,
Ciuffo Biagio
Publication year - 2017
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12130
Subject(s) - sustainability , economics , stock (firearms) , overlapping generations model , pension , compensation (psychology) , investment (military) , transfer payment , payment , public investment , microeconomics , public economics , finance , market economy , welfare , political science , public welfare , ecology , engineering , mechanical engineering , psychology , politics , law , psychoanalysis , biology
Sustainability is about meeting present needs without compromising the needs of future generations. Achieving sustainability is thus bound to have distributional consequences. But to what extent is it possible to correct the ex‐post distribution via transfers between generations? Starting from a numerical example, the analysis uses a stock‐flow‐consistent model with a view to investigate the limitations and consequences of such transfers. It shows that inter‐generational transfers face significant limitations which render compensation payments practically impossible. Moreover, the analysis allows some conclusions regarding the effects of introducing a pension systems and/or a more explicit role of public investment in capital accumulation.