Document Type

Working Paper

Publication Date


Working Paper Number

WP #14016, August 2014


Dynastic models common in macroeconomics use a single parameter to control the willingness of individuals to substitute consumption both intertemporally, or across periods, and intergenerationally, or across parents and their children. This paper defines the concept of Elasticity of Intergenerational Substitution (EGS), and extends a standard dynastic model in order to disentangle the EGS from the EIS, or Elasticity of Intertemporal Substitution. A calibrated version of the model lends strong support to the notion that the EGS is significantly large than 1, and probably around 2.5. In contrast, estimates of the EIS suggests that it is lower than 1. What disciplines the identification is the need to match empirically plausible fertility rates for the U.S.

JEL Classification

D10, D64, D91, J13

File Format



40 pages

File Function

Title page lists as WP #14015, in all databases as WP #14016

Included in

Economics Commons