|Reference : Life-cycle modelling of bequests and its implications for annuity valuation|
|Scientific journals : Article|
|Business & economic sciences : Economic systems & public economics|
|Life-cycle modelling of bequests and its implications for annuity valuation|
|Jousten, Alain [Université de Liège - ULg > HEC-Ecole de gestion de l'ULg : UER > Théorie monétaire et macroéconomie >]|
|Journal of Public Economics|
|Yes (verified by ORBi)|
|[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|
There is no file associated with this reference.
All documents in ORBi are protected by a user license.