Is There a General Criterion for Dynamic Efficiency

Working Paper No. 89

8 Pages Posted: 6 Sep 2000

Date Written: August 1999


This paper analyses an overlapping generations model with absolute bequest motive. It is shown that the widely accepted criterion to verify dynamic efficiency does not apply to this case. In our model the social planner maximizes welfare by choosing a capital stock larger than the golden rule and a real rate of interest smaller than the rate of growth of the economy.

JEL Classification: D69, D99

Suggested Citation

Faria, Joao Ricardo and Campos Martins, Marco Antonio, Is There a General Criterion for Dynamic Efficiency (August 1999). Working Paper No. 89, Available at SSRN: or

Joao Ricardo Faria (Contact Author)

Florida Atlantic University ( email )

Boca Raton, FL 33431
United States

Marco Antonio Campos Martins

Federal Senate - Brazil ( email )

SQS 112 - I - 602
+55-61-346 8663 (Phone)
+55-61-2429215 (Fax)

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