OURNAL OF POLITICAL ECONOMY operative bequest motive-that is, on households being at the corner where the amount of bequest is zero. 7 It should be stressed that the crucial consideration for the above resul an operative intergenerational transfer, rather than an operative bequest motive per se. For example, the transfer could take the form of parental expenditure on children's education, etc, during the overlapping enure of parent and child. Further, the transfer could be occurring in he direction opposite to that specified above. In particular, Ui could be the young to the old generation could be introduced. In that case the same conclusions on the effect of a change in the government debt would be reached if a“ gift motive” were operative.° The mechanism through which changes in B were offset would then be an alteration in the amount of gifts from young to old, rather than an alteration of the amount of b from old to young The results will now be extended to a situation where the taxes which finance the government debt affect some generations which are not currently alive. The extension will be made explicitly only to generation 3 since the extension to generations further advanced in the future is straightforward Suppose now that the current period's interest payments are financed by a lump-sum tax levy on(young )generation 2, the next periods interest payments(on the reissued bonds)are financed by a lump-sum tax levy on (young) generation 3, and the principal is paid off by a lump-sum tax levy on(old) generation 3. 0 The generalization of the earlier results to his situation can be demonstrated by working backward from generation 3. By analogy to equation( 13), the attainable utility of generation 3 can When households are not identical, the aggregate effect of will depend on the fraction of households at a corner, As long this situation, a shift in B will have some upward effect on r in However, this effect would be small", if the fraction of houscholds at a corner bequest motive in climinating the perceived net-wealth effcct so been discussed by Miller and Upton(1974, pp. 176-79) 8 The previous results on the effect of B might not hold were concerned with specific consumption components of their children ("merit goods"), rather than with heir childrens attainable utility. Formally, Ur (4)could depend on(comp of)ci+i or ci+t, rather than on Uf+1. If generation i can tie its aid to generation i l to a specific type of expenditure(as could be the case for education), the previous results next generation to"purchase''more of the item than it otherwise would-and if th parents were not making any other transfers which were equivalent to the transfer of general purchasing power. Becker (1974, sec. 3. C)presents a detailed discussion of the A model which allows for a reciprocal dependence between Ui and Ui+1 is formal similar to the model discussed by Becker(1974, sec. 3.A)in the context of transfe io i do not deal here with the possibility of net government debt issue during the n.age tenure of generation 2. No new considerations would arise here(see however