Basically Samuelson's three generations over lapping. We have two generations, the retired and the working. Worker become retired after some time, so this is time ergodic. Workers cover the interest charges on debt, and some of the retirement. Then one writes out an infinity of generations and solves for the recursive algorithm which gives the interest rate.
Goods and people depreciate equally, in this model, maintaining the ratio between generations. Roger wants 70%, he has over 110%.
The Samuelson method requires that we make infinitely smaller steps toward the goal. That is OK, that can be converted to DSGE which says we are perfectly Gaussian in distance from the goal. It is the perfectly gaussian that is the difficult assumption. I would take Roger's number as an upper bound.
The Samuelson method requires that we make infinitely smaller steps toward the goal. That is OK, that can be converted to DSGE which says we are perfectly Gaussian in distance from the goal. It is the perfectly gaussian that is the difficult assumption. I would take Roger's number as an upper bound.
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