Endogenous transfer institutions in overlapping generations

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.