I managed to thoroughly confuse myself this morning trying to get my new toaster to work. You’d think it would include an instruction manual, but you would be wrong. Apparently it only cooks bread- not chops.

But in the standard Ramsey model, fertility is exogenous.

The model here might be useful for thinking about fertility and capital accumulation in fully modern societies, but does not seem useful for thinking about the demographic transition. (The authors seem to acknowledge as much on p. 14). Until a fairly advanced stage of development is reached, children are both a consumption good and savings vehicle for old age support. That's still the case in China.

Matt's summary hits one of the key problems with the piece. (Full disclosure: I tried reading it two years ago, and was so amazed by the unreality of the simplifying assumptions that I couldn't get through the rest of the paper; have attempted to remedy that this time, but...)

Even after realising that the dynamism of one generation should affect future breeding, the authors maintain the veneer of "let's assume that the cost of child-rearing (Beta), the rate of interest (r), and the wages to be received (w) are all constant."

That alone makes the paper inapplicable to any but an advanced society that accesses cheaper labour only to the extent that (w) can be maintained--even ignoring that one has to assume its value at the beginning of one's adulthood. (Hot type setters need not breed.)

It's a decent framework for a fantasy world--even ignoring the Brooksian assumption that one breeds asap--but it combines so many values in the altruism function that one wishes the author's had less of a magic wand.

Maybe economics should be moved over the biology department.

Remember the point of olg models is to get to a point of stability- not have models that blow up incessantly. Population growth should be considered to be exogenous, unless you assume resource constraints that will also force limits in the model. Personally I think OLG was a dead letter ten years ago, but we still teach it and flog it to the grad students and publish papers perpetuating it. A small usefull tool, but too much has been put into it. Kind of like grand equilibrium theory. Or a super microeconomic theory that explains macroeconomic variance;-}