Endogenous transfer institutions in overlapping generations

Merwan Engineer, Dan Bernhardt

Research output: Contribution to journalArticlepeer-review


We characterize the set of equilibrium transfers between overlapping generations when transfer institutions are endogenous. In stationary economies, Pareto-improving transfers require institutions cost as much to construct as they convey - even if less costly institutions exist that make the same transfer. If institutions can be built upon, they may cost less and convey more, but transfers may become excessive. Interpreting such institutions as social security, we introduce private saving. With time, social security crowds out savings. Still, the potential to save limits any excess transfer. Endogenous costly-to-create 'gold' money institutions are examined, and the role of compulsion in evolving to costless-to-create fiat currency detailed.

Original languageEnglish (US)
Pages (from-to)445-474
Number of pages30
JournalJournal of Monetary Economics
Issue number3
StatePublished - Jun 1992
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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