Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Non-Technical SummaryOptimal tax and transfer systems are key for the design of modern economics. One of the workhorse models used by economists to evaluate the welfare benefits of (reforms to) these systems is the life-cycle model of consumption and savings. The model can, e.g., be used to investigate the reactions of households to savings subsidies or any other kind of reform to old-age insurance, or, more general, any institutional feature of the tax-transfer system.Yet, from a quantitative perspective, it is well known that the standard model produces several "puzzles" in a sense that the standard model cannot match certain facts in the data. It is well established that, relative to an optimal saving rate according to the model, households save too little in the data. Furthermore, the decumulation speed of assets in old-age is much lower in the data than predicted by the standard model. Finally, households behave dynamically inconsistent, in a sense that they generally save less during working life for retirement than they originally planned. Such inconsistencies cannot be accommodated by the standard model.In order to generate correct quantitative predictions it is therefore important to modify the standard model in order to account for these three empirical regularities. This is the aim of the present paper.The specific model element under investigation is the life-expectancy of households which is one of the most important ingredients of the model. Obviously, survival beliefs are of high relevance for savings behavior. The standard model uses objective data on survival beliefs, traced out from population wide survival tables. However, in several datasets that explicitly ask for subjective survival beliefs, substantial biases in survival beliefs relative to such objective data can be observed. E.g., young people strongly underestimate whereas old people (after retirement) strongly overestimate their chances to survive into the future. This paper addresses the question how these biases in survival beliefs may alter model savings behavior, thereby bringing model predictions closer to the data on household savings. On the one hand, underestimation of survival beliefs may lead to lower savings than in the standard model. On the other hand, overestimation in old-age may lead to the fact that households hold on to their assets longer in life than predicted by the standard model.To test whether the observed biases in survival be...

In this paper, we study the labour supply effects and the redistributional consequences of the U.S. social security system. We focus particularly on auxiliary benefits, where eligibility is linked to marital status. To this end, we develop a dynamic, structural life cycle model of singles and couples, featuring uncertain marital status and survival. We account for the socio-economic gradients to both marriage stability and life expectancy. We find that auxiliary benefits have a large depressing effect on married women’s employment. Moreover, we show that a revenue neutral minimum benefit scheme would moderately reduce inequality relative to the current U.S. system.

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Demographic change raises demand for non‐tradable old‐age related services relative to tradable commodities. This demand shift increases the relative price of non‐tradables and thereby causes real exchange rates to appreciate. We claim that the change in demand affects prices via imperfect intersectoral factor mobility. Using a sample of 15 OECD countries, we estimate a robust increase of relative prices. According to our main estimate, up to one fifth of the average increase in relative prices between 1970 and 2009 can be attributed to population ageing. Further findings confirm the relevance of imperfect factor mobility: Countries with more rigid labour markets experience stronger price effects.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In this paper, we compare growth and welfare e¤ects of various budget rules within an endogenous growth model with productive public capital, utility enhancing public consumption and public debt. We …nd that a …xed de…cit regime does not a¤ect the long run growth rate compared to a balanced budget while the growth rate is increased by a golden rule. Welfare e¤ects are ambiguous. Simulations indicate that economies populated by households who have a strong tendency to smooth consumption should adhere to a balanced budget rather than a golden rule or a …xed de…cit rule from a welfare point of view. Terms of use: Documents in