Donor Altruism and the Transfer Paradox in an Overlapping Generations Model. Issue 5 (14th July 2014)

• Record Type: Journal Article
• Authors: Hamada, Kojun; Yanagihara, Mitsuyoshi
• Is Part Of: Review of international economics. Volume 22:Issue 5(2014:Nov.)
• Page Start: 905
• Page End: 922
• Publication Date: 2014-07-14
• Subjects: International economic relations -- Periodicals; International finance -- Periodicals; Economic policy -- Periodicals; 330
• DOI: 10.1111/roie.12142
• Languages: English
• ISSNs: 0965-7576

Abstract

<abstract abstract-type="main"> <title>Abstract</title> <p>This paper examines the transfer problem between two countries when a donor exhibits altruistic utility toward a recipient in a one‐sector overlapping generations model. We demonstrate that if the donor has a larger marginal propensity to save than the recipient, the donor's altruism never contributes to donor enrichment irrespective of the degree of the donor's altruism. Donor enrichment occurs only if the donor has a smaller marginal propensity to save and a sufficiently high level of altruism. These findings imply that the altruism of a donor toward a recipient does not necessarily explain the motivation to voluntarily provide a transfer.</p> </abstract>