A NOTE ON THE GOLDEN-RULE CONDITION IN THE OVERLAPPING GENERATIONS GROWTH MODEL

Abstract

This paper examines the existence problem of the stationary state that maximizes per capita utility in Samuelson-D iamond model of overlapping generations combined with the post-Keynesian model o f capital growth. Since in a life-cycle consumption model the consumer's decisio n depends on capital intensity, the relation between consumer's utility and capi tal intensity is not as simple asin the post-Keynesian model of capital growth. In this paper the authors show that a unique and stable stationary state is a l ocal minimum, if it satisfies the well-known Swan-Phelps golden-rule production relation. Copyright 1986 by Blackwell Publishers Ltd and The Victoria University of Manchester