Economic Growth within OLG Framework: the Problem of Dynamic Effi ciency and Pareto Optimality
The article deals with the problems of dynamic efficiency of capital accumulation and Pareto-optimality of consumer goods distribution between the generations of economic agents in the basic economic growth models within the overlapping generations (OLG) framework. The setups and main properties of deterministic and stochastic versions of the basic OLG-model are discussed in the paper. It is shown that in the deterministic OLG-model, the dynamic efficiency of capital accumulation is directly related to Pareto-optimal consumer goods distribution between the generations of economic agents, while in the stochastic version of the basic OLG-model the dynamic inefficiency is a particular case of Pareto sub-optimality. Some economic policy implications of these situations are discussed in the paper.