On the Golden Rule of Capital Accumulation underEndogenous Longevity

De la Croix, David;Ponthière, Grégory
(2008) , 9 pages

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  • De la Croix, DavidUCLouvain
    Author
  • Ponthière, GrégoryPSE and Ecole Normale Suprieure (Paris)
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Abstract
This note derives the Golden Rule of capital accumulation in a Chakraborty-type economy, i.e. a two-period OLG economy where longevity is endogenous. It is shown that the capital per worker maximizing steady-state consumption per head is inferior to the Golden Rule capital level prevailing under exogenous longevity. We characterize also the Lifetime Golden Rule, that is, the capital per worker maximizing steady-state expected lifetime consumption per head, and show that this tends to exceed the standard Golden Rule capital level.
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De la Croix, D., & Ponthière, G. (2008). On the Golden Rule of Capital Accumulation underEndogenous Longevity (ECON Discussion Papers 2008-32). https://hdl.handle.net/2078.5/249436