Mitsuyoshi Yanagihara

Public goods and the transfer paradox in an overlapping generations model

This paper, incorporating public goods into a two-country Diamond overlapping generations model, shows the existence of a transfer paradox. Governments supply public goods, in addition to imposing a tax on workers and issuing government bonds. In the short-run, only a weak paradox can occur, but in the long-run, both weak and strong paradoxes can occur. These paradoxical results depend on government policy concerning the level of supply of public goods, and on the difference in the levels of externality of public goods between the donor country and the recipient country. The transitional economy will also be discussed.

Donor Altruism and the Transfer Paradox in an Overlapping Generations Model

This paper examines the transfer problem between two countries when a donor exhibits altruistic utility toward a recipient in a one-sector overlapping generations model. We demonstrate that if the donor has a larger marginal propensity to save than the recipient, the donors altruism never contributes to donor enrichment irrespective of the degree of the donors altruism. Donor enrichment occurs only if the donor has a smaller marginal propensity to save and a sufficiently high level of altruism. These findings imply that the altruism of a donor toward a recipient does not necessarily explain the motivation to voluntarily provide a transfer.

Private and Public Education: Human Capital Accumulation Under Parental Teaching

This paper examines a simple overlapping generations model of human capital accumulation under both the public and private education regimes. Both young individuals and their parents allocate time to human capital accumulation. Under the public education regime, the government collects tax to finance expenditure for education resources. We show that there exists a level of tax which maximizes the speed of human capital accumulation because of parental teaching; and, if the government chooses tax rates adequately, human capital grows faster and welfare levels become higher under the public education regime than under the private.

Population growth and the transfer paradox in an overlapping generations model

This study investigates whether the transfer paradox (donor enrichment and/or recipient impoverishment) occurs when a donor and a recipient have different population growth rates by using a one‐sector, two‐country overlapping generations model. We show that if the population growth rates differ, neither donor enrichment nor recipient impoverishment occurs in the steady state under dynamic efficiency. This result is in stark contrast to the existing results that the transfer paradox might occur when a donor and a recipient country have different marginal propensities to save, assuming that both have the same population growth rate. Furthermore, we present the condition for the transfer problem to occur on the transition path and show that the transfer paradox is less likely to occur as the economy converges to the steady state. Our result shows that the prevailing finding that the transfer paradox can occur in an overlapping generations model is limited to the special case of countries having the same population growth rate.

Market Expansion by Advertising and a Mixed Oligopoly

We introduce a market-expanding measure, advertising, into the model of a mixed oligopoly and show how advertising affects the levels of production for both public and private firms. We also investigate the advertising level of these firms under a mixed oligopoly and after the privatization of the public firm. Through this analysis, we clarify the critical role of the public firm in expanding market demand. The public firm increases its level of advertising because it acknowledges the expanding effect on the behavior of private firms.

Physical Capital Accumulation and Partial Privatization

This chapter investigates the effect of capital accumulation on partial privatization. We extend the dynamic oligopoly model proposed by Cellini and Lambertini in 1998 to a dynamic mixed oligopoly model. We show that (i) when a steady state is characterized by a demand-driven (i.e., static) equilibrium, partial privatization is adopted and the privatization ratio perfectly corresponds to the static model; (ii) when a public firm produces Ramsey output, the level of social welfare in a steady state does not depend on the privatization ratio; and (iii) when a private firm produces Ramsey output, the government adopts a full nationalization policy. The results of (ii) and (iii) are in contrast with the static result that partial privatization is optimal.

Regional Differences and Privatization

This chapter analyzes a mixed oligopoly model with two asymmetric regions with different populations, number of private firms, and shareholding ratios of private firms. We consider three cases: local ownership where the public firms are owned by the local government, state ownership where they are owned by the national government, and private ownership where they are owned by the private sector. We show that social welfare in the case of state ownership is greater than that in local ownership. Even in the case of local ownership, the government can replicate the equilibrium outcomes in the state ownership case by dividing the regions into optimal population sizes. We also show that if the number of private firms is large enough, although the public firms should be privatized from a national perspective, social welfare in its region may decrease because of privatization.

The Transfer Problem and Intergenerational Allocation in an Overlapping Generations Model

ABSTRACT We investigate the transfer problem between two countries in the steady state in a one-sector overlapping generations model and explain how transfers should be shared between the young and old generations of the donor country and allocated across the generations of the recipient country. Except at the golden rule of capital accumulation, the ratios of the burden and distribution of transfers between the young and old generations affect welfare. We obtain the following results. First, the sharing of the transfer burden in the donor country depends on the relative size of two effects, namely, a negative direct effect and a positive indirect effect. If the former exceeds the latter, it is preferable for the donor country to allocate all of the transfer burden to the old generation and vice versa. Second, from the viewpoint of welfare maximization, it is preferable for the recipient country to distribute all of the transfers to the young generation. In contrast to the existing literature, these results suggest that the setting whereby the young generation of the donor country defrays all transfer costs may not be justifiable from the viewpoint of donor welfare maximization.

Life Insurance, Human Capital Accumulation and Economic Growth

We compare growth rates in the absence and presence of life insurance using an overlapping generations framework with human capital accumulation to clarify how life insurance contributes to economic growth through the education investment of individuals depending on economic circumstances. Our results show that, as expected, the growth rate is higher when there is life insurance if the rate of time preference or the productivity of human capital accumulation is sufficiently low and if the income loss induced from lifetime uncertainty is moderate. However, if the income loss is sufficiently large, the growth rate is lower when there is life insurance.