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Idiosyncratic Risk, Aggregate Risk, and the Welfare Effects of Social Security
We ask whether a pay-as-you-go financed social security system is welfare improving in an economy with idiosyncratic productivity and aggregate business cycle risk. We show analytically that the whole welfare benefit from ...
Endogenous Grids in Higher Dimensions: Delaunay Interpolation and Hybrid Methods
This paper investigates extensions of the method of endogenous gridpoints (ENDGM) introduced by Carroll (2006) to higher dimensions with more than one continuous endogenous state variable. We compare three different ...
Aging and Pension Reform: Extending the Retirement Age and Human Capital Formation
Projected demographic changes in industrialized and developing countries vary in extent and timing but will reduce the share of the population in working age everywhere. Conventional wisdom suggests that this will increase ...
Optimal Taxes on Capital in the OLG Model with Uninsurable Idiosyncratic Income Risk
We characterize the optimal linear tax on capital in an Overlapping Generations model with two period lived households facing uninsurable idiosyncratic labor income risk. The Ramsey government internalizes the general ...