Stimulating Annuity Markets

33 Pages Posted: 1 Jul 2014

See all articles by Ben J. Heijdra

Ben J. Heijdra

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Jochen O. Mierau

University of Groningen; Netspar

Timo Trimborn

University of Goettingen (Gottingen)

Multiple version iconThere are 2 versions of this paper

Date Written: May 30, 2014

Abstract

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 some intermediate level of annuitization such that long-run welfare is maximized. Studying the transition to the optimal degree of annuitization shows that currently middle-aged individuals stand to gain most from the stimulation of annuity markets.

Keywords: Individual welfare, annuity markets, computable general equilibrium, overlapping generations

JEL Classification: C68, D91, J14, H55

Suggested Citation

Heijdra, Ben J. and Mierau, Jochen O. and Trimborn, Timo, Stimulating Annuity Markets (May 30, 2014). Netspar Discussion Paper No. 05/2014-018. Available at SSRN: https://ssrn.com/abstract=2460687 or http://dx.doi.org/10.2139/ssrn.2460687

Ben J. Heijdra

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 7303 (Phone)
+31 50 363 7337 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Jochen O. Mierau (Contact Author)

University of Groningen ( email )

P.O. Box 800
9700 AV Groningen
Netherlands

HOME PAGE: http://www.rug.nl/staff/j.o.mierau

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Timo Trimborn

University of Goettingen (Gottingen) ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

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