EconPapers    
Economics at your fingertips  
 

Intergenerational Redistribution in the Great Recession

José-Víctor Ríos-Rull, Jonathan Heathcote, Dirk Krueger and Andy Glover

No 141, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: We construct stochastic overlapping-generations general equilibrium models in which households are subject to aggregate shocks that affect both wages and asset prices. We use a calibrated version of the model to quantify how the welfare costs of severe recessions are distributed across different age groups. The model predicts that younger cohorts fare better than older cohorts when the equilibrium decline in asset prices is large relative to the decline in wages. Asset price declines hurt the old, who rely on asset sales to finance consumption, but benefit the young, who purchase assets at depressed prices. In our preferred calibration, asset prices decline more than twice as much as wages, consistently with the experience of the US economy in the Great Recession. A model recession is approximately welfare-neutral for households in the 20-29 age group, but translates into a large welfare loss of around 10 percent of lifetime consumption for households aged 70 and over.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (26)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Intergenerational Redistribution in the Great Recession (2020) Downloads
Working Paper: Intergenerational Redistribution in the Great Recession (2014) Downloads
Working Paper: Intergenerational Redistribution in the Great Recession (2011) Downloads
Working Paper: Intergenerational redistribution in the Great Recession (2011) Downloads
Working Paper: Intergenerational Redistribution in the Great Recession (2011) Downloads
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:red:sed011:141

Access Statistics for this paper

More papers in 2011 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

 
Page updated 2025-03-31
Handle: RePEc:red:sed011:141