Utility from Bequeathing Savings or Utility from Accumulating in the Ramsey Growth Model
23 Pages Posted: 25 Nov 2014
Date Written: November 23, 2014
Abstract
Despite ‘joy of giving models’ have been extensively examined in the literature, the Ramsey growth model has never been explored under the assumption of a direct preference for bequeathing savings that are reinvested. This assumption implies a Utility function depending on both consumption and savings, which may also be motivated as one that captures a direct preference for thriftiness or wealth accumulation arguably involved. The resulting growth model generalizes those accounting for the capitalist spirit as Zou (1994), and shows that the restrictive standard one is perhaps not the actual optimized version of the Solow model.
Keywords: Bequest, joy-of-giving, Ramsey growth model, Spirit of capitalism, optimal control, altruism
JEL Classification: O41, E21, D91
Suggested Citation: Suggested Citation