Optimal Growth and Transfers between Generations

Given the difficulties of utilitarian and egalitarian social welfare functions in the context of intergenerational equity, an analysis directly based on the potential transfers that can be made between generations is proposed. A consumption path may be rejected if some transfers with infinite returns can be made. It is shown that such potential transfers are unlikely in the short run in ordinary growth models, but that the returns to sacrifice are often unbounded when distant dates are considered, except in some particular cases. These concepts help select acceptable growth paths, and give some insight into the dilemmas of intergenerational justice.