An overlapping generations model, abbreviated to OLG model, is a type of economic model in which agents live a finite length of time long enough to overlap with at least one period of another agent's life.
All OLG models share several key elements:
- Individuals receive an endowment of goods at birth.
- Goods cannot endure for more than one period.
- Money endures for multiple periods.
- Individual's lifetime utility is a function of consumption in all periods.
The concept of an OLG model was inspired by Irving Fisher's monograph The Theory of Interest. Notable improvements were published by Maurice Allais in 1947, Paul Samuelson in 1958, and Peter Diamond in 1965.
Read more about Overlapping Generations Model: Basic OLG Model, Attributes of The OLG Model, OLG Models With Production
Famous quotes containing the words overlapping, generations and/or model:
“The absolute things, the last things, the overlapping things, are the truly philosophic concerns; all superior minds feel seriously about them, and the mind with the shortest views is simply the mind of the more shallow man.”
—William James (1842–1910)
“The danger lies in forgetting what we had. The flow between generations becomes a trickle, grandchildren tape-recording grandparents’ memories on special occasions perhaps—no casual storytelling jogged by daily life, there being no shared daily life what with migrations, exiles, diasporas, rendings, the search for work. Or there is a shared daily life riddled with holes of silence.”
—Adrienne Rich (b. 1929)
“The best way to teach a child restraint and generosity is to be a model of those qualities yourself. If your child sees that you want a particular item but refrain from buying it, either because it isn’t practical or because you can’t afford it, he will begin to understand restraint. Likewise, if you donate books or clothing to charity, take him with you to distribute the items to teach him about generosity.”
—Lawrence Balter (20th century)