Overlapping generations model

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The overlapping generations (OLG) model is one of the dominating frameworks of analysis in the study of macroeconomic dynamics and economic growth. In contrast to the Ramsey–Cass–Koopmans neoclassical growth model in which individuals are infinitely-lived, in the OLG model individuals live a finite length of time, long enough to overlap with at least one period of another agent's life.

The OLG model is the natural framework for the study of: (a) the life-cycle behavior (investment in human capital, work and saving for retirement), (b) the implications of the allocation of resources across the generations, such as Social Security, on the income per capita in the long-run,^[1] (c) the determinants of economic growth in the course of human history, and (d) the factors that triggered the fertility transition.