The Overlapping Generations Model

  • Burkhard Heer
Part of the Springer Texts in Business and Economics book series (STBE)


This chapter investigate the standard overlapping generations (OLG) model with two periods. It serves as one of the main tools to study problems in modern public finance such as pensions, unemployment insurance, and debt. The standard OLG model will be shown to be possibly Pareto-inefficient. In addition, we discuss the problem of stability and note that it is less relevant for the large-scale OLG models that we consider in later chapters than for simple two-period models. With the help of an example, we show that the transition in the OLG model might take place over very long time horizons exceeding several decades. In addition, important extensions of the standard two-period OLG model such as bequests and growth are introduced.


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© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Burkhard Heer
    • 1
  1. 1.Department of Business and EconomicsUniversity of AugsburgAugsburgGermany

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