Abstract
We consider an overlapping generations model of small open economy with Harrod neutral technical progress. If the interest rate is less than the growth rate, intergenerational public transfers increase welfare of some generations and reduce welfare of others. Then, we consider a central planner who maximises an intertemporal social welfare function defined as a discounted sum of generational utilities. In many cases, the optimal path entails a new repartition of technical progress between generations. More precisely, the optimal growth rate of consumptions could be higher or lower than technical progress growth rate. If it's lower, first generations benefits of a technical progress that occurs in the future. This entails an important borrowing which have to be returned by transfers from the young to the old. These transfers grow permanently and, in long run, become higher than wages. On the other hand, if optimal consumptions and technical progress growth rates are equal, intergenerational transfers that allow a decentralization of the optimal path can be from the young to the old or the old to the young.
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