FAMILY ALLOWANCES AS WELFARE IMPROVEMENTS

The present paper studies the equilibria of a simple overlapping gener ations model of pure exchange in which money is traded. There is a con tinuum of agents in each generation and population growth is endogenou s via voluntary decisions on children. Any monetary steady state has t o satisfy the ''golden rule'' that the interest rate equals the growth rate. Still such a monetary steady state may be inefficient. If raisi ng children is not excessively profitable, then there exists a transfe r scheme, in favor of those who raise children, which improves upon th e steady state.