We consider a simple overlapping generations model with an externality à la Arrow-Romer[1,2] and a government with fiscal powers. If it wishes to maximize a criterion depending on the lifelong utility of agents, is there a natural weight for the utility of the current old? We show in a simple example that this weight depends on the specific features of the model, in particular the length of the horizon, and cannot be chosen arbitrarily. Our result has a neat economic interpretation .
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D. Gaumont and D. Leonard, “Human Capital, Externalities and Growth in an Overlapping Generations Model,” Research in Economics, Vol. 60, No. 3, 2010, pp. 186-200. http://dx.doi.org/10.1016/j.rie.2010.04.001