A note on welfare measures
نویسنده
چکیده
I show that the “consumption variation” approach, commonly used in infinitely lived agent models to measure the welfare impact of a policy, is not accurate in overlapping generations environments. While in an infinitely lived agent environment the consumption variation can be shown to be equivalent to a measure based on the Hicks compensation principle, this is not true in overlapping generations economies. JEL Classification: E0
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