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Full-Text Articles in Social and Behavioral Sciences
Target Saving In An Overlapping Generations Model, Brishti Guha, Ashok S. Guha
Target Saving In An Overlapping Generations Model, Brishti Guha, Ashok S. Guha
Research Collection School Of Economics
We examine a model in which the utility function has been engineered so that it is optimal for consumers to aim for a fixed target level of retirement resources. In this case, consumption displays excess sensitivity to current income as well as perfect old age insurance. In an overlapping generations model, this leads naturally to multiple and unstable equilibria. Under static expectations, it also leads to a well-defined dynamics, including possible historical traps, implosions involving ever-diminishing capital stock and ever-increasing interest rates, and the feasibility of optimal one-time interventions.
Target Saving In An Overlapping Generations Model, Ashok S. Guha, Brishti Guha
Target Saving In An Overlapping Generations Model, Ashok S. Guha, Brishti Guha
Research Collection School Of Economics
We examine a model in which the utility function has been engineered so that it is optimal for consumers to aim for a fixed target level of retirement resources. In this case consumption displays excess sensitivity to current income as well as perfect old age insurance. In an overlapping generations model, this leads naturally to multiple and unstable equilibria. Under static expectations, it also leads to a well-defined dynamics, including possible historical traps, implosions involving ever-diminishing capital stock and ever-increasing interest rates, and the feasibility of optimal one-time interventions.
Future Targets And Multiple Equilibria, Ashok S. Guha, Brishti Guha
Future Targets And Multiple Equilibria, Ashok S. Guha, Brishti Guha
Research Collection School Of Economics
Multiple Pareto-rankable equilibria may obtain in an overlapping generations model where consumers save to reach a fixed target. Existence and uniqueness conditions are discussed. The model displays excess consumption sensitivity to current income and perfect old-age insurance.