In this paper we investigate whether uncertainty on the real rate of return on capital and productivity growth (labelled as economic uncertainty) is more or less important than mortality and fertility uncertainty (labelled as demographic uncertainty) for a consumer facing a decision how much to save. Furthermore we look at the errors that are made when uncertainty is neglected in consumer behaviour. The results indicate that economic uncertainty is far more important than demographic uncertainty. The welfare costs of neglecting uncertainty in consumer behaviour seem to be small.
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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Memoranda with number
168.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Lindbeck, Assar & Persson, Mats, 2002.
"The Gains from Pension Reform,"
Seminar Papers
712, Stockholm University, Institute for International Economic Studies.
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