Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The Effects of Annuities, Bequests, and Aging in an Overlapping Generations Model of Endogenous Growth

The Effects of Annuities, Bequests, and Aging in an Overlapping Generations Model of Endogenous... Abstract We examine the effects of introducing actuarially fair annuity markets into an overlapping generations model of endogenous growth. The complete annuitisation of agents' wealth is not, in general, dynamically optimal; the degree of annuitisation that is dynamically optimal depends nonmonotonically on the expected length of retirement and on the pay-as-you-go social security tax rate. The government has an incentive to restrict the availability of actuarially fair annuities contracts, and can often move the economy from a pay-as-you-go to a fully-funded social security system via voluntary contributions to a government sponsored, actuarially fair pension today accompanied by reductions in social security taxes tomorrow. This content is only available as a PDF. Author notes We would like to thank Giuseppe Bertola, who provided the idea for this paper, the seminar participants at Michigan State University and an anonymous referee for comments. The views expressed in this paper are solely those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of St Louis, nor of the Federal Reserve System. © Copyright 1997 by the Royal Economic Society http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economic Journal Oxford University Press

The Effects of Annuities, Bequests, and Aging in an Overlapping Generations Model of Endogenous Growth

Economic Journal , Volume 107 (440) – Jan 1, 1997

Loading next page...
 
/lp/oxford-university-press/the-effects-of-annuities-bequests-and-aging-in-an-overlapping-B3x0fpbm3P

References (27)

Publisher
Oxford University Press
Copyright
© Copyright 1997 by the Royal Economic Society
ISSN
0013-0133
eISSN
1468-0297
DOI
10.1111/1468-0297.00140
Publisher site
See Article on Publisher Site

Abstract

Abstract We examine the effects of introducing actuarially fair annuity markets into an overlapping generations model of endogenous growth. The complete annuitisation of agents' wealth is not, in general, dynamically optimal; the degree of annuitisation that is dynamically optimal depends nonmonotonically on the expected length of retirement and on the pay-as-you-go social security tax rate. The government has an incentive to restrict the availability of actuarially fair annuities contracts, and can often move the economy from a pay-as-you-go to a fully-funded social security system via voluntary contributions to a government sponsored, actuarially fair pension today accompanied by reductions in social security taxes tomorrow. This content is only available as a PDF. Author notes We would like to thank Giuseppe Bertola, who provided the idea for this paper, the seminar participants at Michigan State University and an anonymous referee for comments. The views expressed in this paper are solely those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of St Louis, nor of the Federal Reserve System. © Copyright 1997 by the Royal Economic Society

Journal

Economic JournalOxford University Press

Published: Jan 1, 1997

There are no references for this article.