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| Reference : Life-cycle modelling of bequests and its implications for annuity valuation |
| Scientific journals : Article | |||
| Business & economic sciences : Economic systems & public economics | |||
| http://hdl.handle.net/2268/17674 | |||
| Life-cycle modelling of bequests and its implications for annuity valuation | |
| English | |
Jousten, Alain  [Université de Liège - ULg > HEC-Ecole de gestion de l'ULg : UER > Théorie monétaire et macroéconomie >] | |
| 2001 | |
| Journal of Public Economics | |
| Elsevier Science | |
| 79 | |
| 149-177 | |
| Yes (verified by ORBi) | |
| International | |
| 0047-2727 | |
| Lausanne | |
| Switzerland | |
| [en] bequests ; annuities ; consumption function | |
| [en] In this paper we introduce a linear bequest motive into a standard life-cycle model, both
allowing for credit and annuity market imperfections. First, we characterize the consumption and wealth processes.We find that consumption is non-increasing in the linear bequest parameter for the simplest certainty case, but that the same is not true for life-span uncertainty. Second, we study the issue of annuity valuation. For a sufficiently strong bequest motive, the true value of an annuity is equal to the actuarial value. This invalidates a previous claim that, for imperfect annuity markets, it is close to the simple financial value. | |
| Researchers ; Professionals | |
| http://hdl.handle.net/2268/17674 |
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