On overlapping generations models with productive capital

This work emerged from five years of research at Sonderforschungsbereich 303, supported by the Deutsche Forschungsgemeinschaft (DFG) at Rheinische Friedrich-Wilhelms-Universität Bonn, and was approved as my doctoral thesis in December 1994. My former colleague Wolfgang Peters introduced me to overlapping-generations models and the issues of intergenerational efficiency and distribution. I have been captivated by the intricate relationship between these concepts: the redistribution resulting from free trade may be necessary for efficiency, even in the absence of externalities hindering economic development. Despite being a well-established area of economics, neoclassical growth theory has left numerous questions unresolved, some even overlooked by many in the field. I sought to address these challenging issues, including the frequently discussed concept of the intergenerational contract. While intergenerational transfers can enhance intertemporal efficiency, designing pension schemes that improve the well-being of certain generations without adversely affecting others is complex, particularly in economies with flexible prices. Often, decisions about generational outcomes focus solely on interest and growth rates, neglecting broader implications.