Stimulating annuity markets

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We study the short-, medium-, and long-run implications of stimulating annuity markets in a dynamic general-equilibrium overlapping-generations model. We find that beneficial partial-equilibrium effects of stimulating annuity markets are counteracted by negative general-equilibrium repercussions. Balancing the positive partial-equilibrium and negative general-equilibrium forces we show that there exists an intermediate level of annuitization such that the lifetime utility of steady-state agents is maximized. Studying the transition to this optimal degree of annuitization shows that currently middle-aged individuals stand to gain most from the stimulation of annuity markets. Complementing our main analysis, we highlight the centrality of the interplay between human-capital accumulation and annuity market policy.
Originele taal-2English
Pagina's (van-tot)554-583
Aantal pagina's30
TijdschriftJournal of Pension Economics and Finance
Volume16
Nummer van het tijdschrift4
Vroegere onlinedatum16-apr-2016
DOI's
StatusPublished - okt-2017

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