Intergenerational Insurance

Francesco Lancia, Alessia Russo and Timothy Worrall

Journal of Political Economy, 2024, vol. 132, issue 10, 3500 - 3544

Abstract: How should successive generations insure each other when the young can default on previously promised transfers to the old? This paper studies intergenerational insurance that maximizes the expected discounted utility of all generations subject to participation constraints for each generation. If complete insurance is unattainable, the optimal intergenerational insurance is history dependent even when the environment is stationary. The risk from a generational shock is spread into the future with periodic “resetting.” If we interpret intergenerational insurance in terms of debt, the fiscal reaction function is nonlinear and the risk premium on debt is lower than the risk premium with complete insurance.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1086/730206 (application/pdf)
http://dx.doi.org/10.1086/730206 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
Working Paper: Intergenerational Insurance (2024)
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:ucp:jpolec:doi:10.1086/730206

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().