In this paper we study the welfare effects of eliminating social security in a model with two sided altruism where social security provides insurance against lifetime and individual income uncertainty. Our findings indicate that households are able to shift the efficiency gains, generated...

Japanese and U.S. saving rates have been significantly different over the last forty years. Can a standard growth model explain this difference? The answer is yes. Our results indicate that both an infinite horizon, complete markets setup and an overlapping generations model with incomplete...

In this paper, we reexamine the question "Why doesn't capital flow from rich to poor countries?" posed, most recently, by Lucas (1990). We build a simple contracting framework where costly intermediation together with an adverse selection problem have quantitatively important effects on capital...

McGrattan and Prescott (2003) argue that the average equity premium is less than one percent when the annual data used in the computation are adjusted in certain ways: equity returns reduced by subtracting diversification costs and taxes on dividend yields, and debt yields are raised by using...