On Second-Best National Saving and Game-Equilibrium Growth

@article{Phelps1968OnSN,
  title={On Second-Best National Saving and Game-Equilibrium Growth},
  author={Edmund S. Phelps and Robert A Pollak},
  journal={The Review of Economic Studies},
  year={1968},
  volume={35},
  pages={185-199}
}
This chapter highlights the question whether second-best saving is greater or smaller than first-best saving when given future saving is non-optimal from the standpoint of the present generation. The chapter presents the postulation that all generations expect each succeeding generation to choose the saving ratio that is second-best in its eyes. This somewhat game-theoretic model leads to the concept of an equilibrium sequence of saving-income ratios having the property that no generation… 

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