In Samuelson’s model, people live for two periods only, so that the ongoing
economy is always populated by two age cohorts, one young and the
other old. Here I assume a constant population, so that per capita and economy-
wide magnitudes can be used interchangeably. At each year’s end, the
old die, the young become old, and a new young group arrives. It is important
for my purposes (as it was for Samuelson’s) to assume that there is no
family structure in this economy: no inheritances and no financial support
by one cohort for another. Suppose that a young person in this economy can
work and produce goods, while an old person likes to consume goods but
has no ability to produce them. Denote a person’s two objects of choice by
the pair (c, n), where n is units of labor supplied when young and c is units
of the good consumed when old. Assume that everyone’s preferences over
these two goods are given by
In Samuelson’s model, people live for two periods only, so that the ongoingeconomy is always populated by two age cohorts, one young and theother old. Here I assume a constant population, so that per capita and economy-wide magnitudes can be used interchangeably. At each year’s end, theold die, the young become old, and a new young group arrives. It is importantfor my purposes (as it was for Samuelson’s) to assume that there is nofamily structure in this economy: no inheritances and no financial supportby one cohort for another. Suppose that a young person in this economy canwork and produce goods, while an old person likes to consume goods buthas no ability to produce them. Denote a person’s two objects of choice bythe pair (c, n), where n is units of labor supplied when young and c is unitsof the good consumed when old. Assume that everyone’s preferences overthese two goods are given by
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