Most industrialized countries provide a subsistence level consumption floor in old age, usually in the form of means-tested benefits or income supplements. The availability of such means-tested payments creates an incentive to optimally cash out (occupational) pension wealth for low and middle...

The paper analyzes the role of governmental debt in an overlapping generations economy with stochastic production and capital accumulation. In the absence of taxation, equilibria with positive debt generically converge to debtless equilibria which are dynamically inefficient. It is shown that...

Various studies have interpreted a positive correlation between income risk and wealth as evidence for large precautionary savings. However, the high estimates emerged from pooling non-entrepreneurs and entrepreneurs without controlling for heterogeneity. This paper provides evidence for Germany...

This paper studies an environment with two infinitely-lived altruistic agents whose only sources of income are a risk-free return on savings and voluntary transfers from the other player. We study the Markov-perfect equilibrium of a continuous-game (differential game). On the technical side, we...