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This paper analyzes the intertemporal efficiency and optimality of steady states within overlapping-generations models in which the utility of individual working couples , depends on the consumption of their parents and children as well as their own consumption. The analysis considers both a basic model in which altruistic behavior can take only the form of gifts of consumption goods from working couples to their retired parents and an extended model in which altruistic behavior also can take the form of bequests from parents to their surviving children. In the basic model, saving only involves storing consumption goods, whereas the extended model includes capital and neoclassical production. The following conclusions from the analysis apply to both models: An altruistic utility function promotes inter-temporal efficiency. However, altruism creates an externality that implies that satisfying the conditions for efficiency does not insure intertemporal optimality. Nevertheless, if the utility of working couples is appropriately sensitive at the margin to their own consumption, their parents consumption, and their children's consumption, the steady state that is consistent with individual behavior is both efficient and optimal.

Consumption (Economics) --- Econometric models.

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Accident insurance --- Casualty insurance --- Economic forecasting --- Econometric models --- Econometric models --- Econometric models --- Germany (West) --- Economic conditions --- Econometric models.

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Economic forecasting --- Econometric models. --- Germany (West) --- Economic conditions --- Economics --- Forecasting --- Economic indicators --- Federal Republic of Germany --- Germany (Federal Republic, 1949- ) --- GFR --- West Germany (1949-1990) --- Germanskai︠a︡ Federalʹnai︠a︡ Respublika --- Ḥukūmat Almānyā al-Ittiḥādīyah --- NRF --- Niemiecka Republika Federalna --- FRG --- Federativnai︠a︡ Respublika Germanii --- NSR --- Nĕmecká spolková republika --- Német Szövetségi Köztársaság --- BRD --- Bundesrepublik Deutschland --- Republiḳah ha-federalit ha-Germanit --- Batı Almanya --- Federal Almanya --- Tyske forbundsrepublik --- NSzK --- Repubblica federale tedesca --- Hsi-te cheng fu --- Te-i-chih lien pang kung ho kuo --- RFA --- République fédérale allemande --- RFN --- Republika Federalna Niemiec --- Republik Federasi Jerman --- Germany (Federal Republic) --- G.F.R. --- N.R.F. --- F.R.G. --- N.S.R. --- B.R.D. --- N.Sz.K. --- R.F.A. --- R.F.N. --- Alemania Federal --- République fédérale d'Allemagne --- República Federal de Alemania --- Bondsrepubliek Duitsland --- Repubblica federale di Germania --- German Federal Republic --- Western Germany --- Germany --- Germany (Territory under Allied occupation, 1945-1955) --- Germany (Territory under Allied occupation, 1945-1955 : British Zone) --- Germany (Territory under Allied occupation, 1945-1955 : French Zone) --- Germany (Territory under Allied occupation, 1945-1955 : Russian Zone) --- Germany (Territory under Allied occupation, 1945-1955 : U.S. Zone) --- Germany (East) --- Makroökonomie --- Wirtschaftspolitik