stackyFACTSIn Paul Samuelson's overlapping generations model, there's a bizarre anomaly called 'dynamic inefficiency.' Essentially, if a society over-saves and invests too much in capital, the cost of maintaining all those factories and machines eats up the economic output, leaving less money for actual consumption.
In Paul Samuelson's overlapping generations model, there's a bizarre anomaly called 'dynamic inefficiency.' Essentially, if a society over-saves and invests too much in capital, the cost of maintaining all those factories and machines eats up the economic output, leaving less money for actual consumption. It mathematically proves that you can be so obsessed with building wealth for the future that you completely ruin the standard of living for the present.
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