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Growth Effects of Annuities and Government Transfers in Perpetual Youth Models

Yoshiyuki Miyoshi and Alexis Akira Toda ()

MPRA Paper from University Library of Munich, Germany

Abstract: We show that in overlapping generations endogenous growth models with uncertain lifetime, the introduction of government transfers always increases economic growth by crowding out the private annuity market and increasing accidental bequests. In particular, if the government imposes a flat-rate consumption tax (which is neutral to the consumption-saving margin), uses part of the tax revenue for unproductive purposes, and rebates the rest equally across agents as a lump-sum transfer, the economy grows faster and improves the welfare of future generations.

Keywords: annuity; endogenous growth; overlapping generations; redistribution (search for similar items in EconPapers)
JEL-codes: D58 E21 H20 H21 O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-gro, nep-mac and nep-pbe
Date: 2016-05-16
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Journal Article: Growth effects of annuities and government transfers in perpetual youth models (2017) Downloads
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