An overlapping generations model, abbreviated to OLG model, is a type of economic model in which agents live a finite length of time long enough to overlap with at least one period of another agent's life.
All OLG models share several key elements:
- Individuals receive an endowment of goods at birth.
- Goods cannot endure for more than one period.
- Money endures for multiple periods.
- Individual's lifetime utility is a function of consumption in all periods.
The concept of an OLG model was inspired by Irving Fisher's monograph The Theory of Interest. Notable improvements were published by Maurice Allais in 1947, Paul Samuelson in 1958, and Peter Diamond in 1965.
Read more about Overlapping Generations Model: Basic OLG Model, Attributes of The OLG Model, OLG Models With Production
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“The absolute things, the last things, the overlapping things, are the truly philosophic concerns; all superior minds feel seriously about them, and the mind with the shortest views is simply the mind of the more shallow man.”
—William James (1842–1910)
“There is singularly nothing that makes a difference a difference in beginning and in the middle and in ending except that each generation has something different at which they are all looking. By this I mean so simply that anybody knows it that composition is the difference which makes each and all of them then different from other generations and this is what makes everything different otherwise they are all alike and everybody knows it because everybody says it.”
—Gertrude Stein (1874–1946)
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