Intergenerational sharing of unhedgeable inflation risk

Damiaan H.J. Chen, Roel Beetsma and Sweder J.G. van Wijnbergen

Insurance: Mathematics and Economics, 2023, vol. 113, issue C, 140-160

Abstract: We explore how members of a collective pension scheme can share inflation risks in the absence of suitable financial market instruments. Using intergenerational risk-sharing arrangements, risks can be allocated better across the scheme's participants than would be the case in a strictly individual- or cohort-based pension scheme, as these can only lay off risks via existing financial market instruments. Hence, intergenerational sharing of these risks enhances welfare. In view of the sizes of their funded pension sectors, this would be particularly beneficial for the Netherlands and the U.K.

Keywords: Pension funds; Intergenerational risk-sharing; Unhedgeable inflation risk; Incomplete markets; Welfare loss (search for similar items in EconPapers)
JEL-codes: C61 E21 G11 G23 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167668723000768
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Intergenerational Sharing of Unhedgeable Inflation Risk (2022)
Working Paper: Intergenerational Sharing ofUnhedgeable Inflation Risk (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:insuma:v:113:y:2023:i:c:p:140-160

DOI: 10.1016/j.insmatheco.2023.08.004

Access Statistics for this article

Insurance: Mathematics and Economics is currently edited by R. Kaas, Hansjoerg Albrecher, M. J. Goovaerts and E. S. W. Shiu

More articles in Insurance: Mathematics and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().