Economic Analyses Using the Overlapping Generations Model and General Equilibrium Growth Accounting for the Japanese Economy

10.1142/9011 ◽  
2013 ◽  
Author(s):  
Mitoshi Yamaguchi ◽  
Tomoko Kinugasa
Keyword(s):  
General Equilibrium ◽  
Overlapping Generations ◽  
Japanese Economy ◽  
Growth Accounting ◽  
Overlapping Generations Model ◽  
Economic Analyses ◽  
Equilibrium Growth

The Effects of Monetary Policy Announcements

2019 ◽  
Author(s):  
Chao Gu ◽  
Han Han ◽  
Randall Wright
Keyword(s):  
Monetary Policy ◽  
General Equilibrium ◽  
Overlapping Generations ◽  
Unique Equilibrium ◽  
Policy Changes ◽  
Overlapping Generations Model ◽  
Payment Methods ◽  
Transition Paths ◽  
Sunspot Equilibria ◽  
Monetarist Model

The effects of news (i.e., information innovations) are studied in dynamic general equilibrium models where liquidity matters. As a leading example, news can be announcements about monetary policy directions. In three standard theoretical environments—an overlapping generations model of fiat currency, a new monetarist model accommodating multiple payment methods, and a model of unsecured credit—transition paths are constructed between an announcement and the date at which events are realized. Although the economics is different, in each case, news about monetary policy can induce volatility in financial and other markets, with transitions displaying booms, crashes, and cycles in prices, quantities, and welfare. This is not the same as volatility based on self-fulfilling prophecies (e.g., cyclic or sunspot equilibria) studied elsewhere. Instead, the focus is on the unique equilibrium that is stationary when parameters are constant but still delivers complicated dynamics in simple environments due to information and liquidity effects. This is true even for classically-neutral policy changes. The induced volatility can be bad or good for welfare, but using policy to exploit this in practice seems difficult because outcomes are very sensitive to timing and parameters. The approach can be extended to include news of real factors, as seen in examples.

scholarly journals Stimulating annuity markets

2016 ◽  
Vol 16 (4) ◽  
pp. 554-583
Author(s):  
BEN J. HEIJDRA ◽  
JOCHEN O. MIERAU ◽  
TIMO TRIMBORN
Keyword(s):  
General Equilibrium ◽  
Capital Accumulation ◽  
Overlapping Generations ◽  
Partial Equilibrium ◽  
Human Capital Accumulation ◽  
Overlapping Generations Model ◽  
Long Run ◽  
State Agents ◽  
Annuity Markets ◽  
Stimulation Of

AbstractWe 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 an intermediate level of annuitization such that the lifetime utility of steady-state agents is maximized. Studying the transition to this optimal degree of annuitization shows that currently middle-aged individuals stand to gain most from the stimulation of annuity markets. Complementing our main analysis, we highlight the centrality of the interplay between human-capital accumulation and annuity market policy.

A TRAGEDY OF ANNUITIZATION? LONGEVITY INSURANCE IN GENERAL EQUILIBRIUM

2013 ◽  
Vol 18 (7) ◽  
pp. 1607-1634 ◽  
Author(s):  
Ben J. Heijdra ◽  
Jochen O. Mierau ◽  
S. M. Reijnders
Keyword(s):  
General Equilibrium ◽  
Life Insurance ◽  
Overlapping Generations ◽  
The Elderly ◽  
Positive Probability ◽  
Closed Economy ◽  
Overlapping Generations Model ◽  
Long Run ◽  
Different Types ◽  
Longevity Insurance

We study the microeconomic and macroeconomic effects of longevity insurance. Using a tractable discrete-time overlapping-generations model of a closed economy we first study different types of government redistribution of accidental bequests in general equilibrium. Individuals face longevity risk, as there is a positive probability of passing away before the retirement period. We find nonpathological cases where it is better for long-run welfare to waste accidental bequests than to give them to the elderly. Next we study the introduction of a perfectly competitive life insurance market offering actuarially fair annuities. There exists a tragedy of annuitization: although full annuitization of assets is privately optimal, it is not socially beneficial, because of adverse general equilibrium repercussions.

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