Abstract
The paper examines the nature of fair (envy free, efficient) allocations in an overlapping generations economy without production, in which each generation lives for two periods. It shows that there exists a non-trivial conflict between equity and efficiency when all generations have identical preferences. This conflict is seen to be entirely determined by the historically determined young age consumption of the generation which is old in the first period when the social decisions are being made, relative to the young age consumption in the golden-rule. It then shows by an example that there could exist non-stationary preferences for which such a conflict does not arise regardless of the history of the economy.
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