BibTeX
@MISC{Córdobay_acontribution,
author = {Juan Carlos Córdobay and Marla Ripollz},
title = {A Contribution to the Economic Theory of Fertility},
year = {}
}
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Abstract
Altruistic individuals regard fertility as a form of longevity. As a result, standard time-separable altruistic models of the type commonly used in macroeconomics cannot account for the evidence of increasing longevity but decreasing fertility as income rises, a puzzle. We show that a non-separable formulation of preferences that allows for a low elasticity of intertemporal substitution (EIS) but a high elasticity of intergenerational substitution (EGS) can explain the longevity-fertility puzzle. The model with a single elasticity cannot account for both. Our results suggests a major role for a new parameter in macro, the EGS. While the EIS mostly inuences short-term economic decisions, the EGS inuences mostly long-term economic choices.
Keyphrases
economic theory new parameter altruistic individual long-term economic choice intertemporal substitution longevity-fertility puzzle egs inuences income rise non-separable formulation intergenerational substitution major role single elasticity cannot account low elasticity high elasticity short-term economic decision standard time-separable altruistic model
