No abstract

Pension Benefit Guarantee Corporation (PBGC) initially insured private pension benelits in exchange for a premium that was not risk sensitive. This paper derives conditions under which a moral hazard problem caused promised pension benefits to increase. The hypotheses are tested using data on individual pension contracts from the pre-and post-PBGC periods. 'For a general discussion of moral hazard, see Stiglitz (1983).

No abstract

This article examines how the pension insurance provided by the PBGC and the tax treatment of pension plans affect the cost of labor and capital. Two important aspects of the insurance program are (1) the premium schedule and (2) an employer's liability for unfunded pension benefits (the deductible). These two aspects interact to increase the cost of capital relative to labor, especially for firms with underfunded plans.

Catastrophe futures and options are derivative securities whose payoffs depend on insurers' underwriting losses arising from natural catastrophes (e.g., hurricanes).