Intergenerational Sharing of Unhedgeable Inflation Risk

Damiaan Chen, Roel Beetsma and Sweder van Wijnbergen

No 17720, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: 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 various participants of a collective pension scheme 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.

JEL-codes: C61 E21 G11 G23 (search for similar items in EconPapers)
Date: 2022-12
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Journal Article: Intergenerational sharing of unhedgeable inflation risk (2023)
Working Paper: Intergenerational Sharing ofUnhedgeable Inflation Risk (2022)
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