The Life-Cycle Hypothesis, Fiscal Policy, and Social Security
AbstractThe paper reviews some of the most important results of the Life Cycle Hypothesis for understanding individual and aggregate saving behaviour. It then turns to the implications for fiscal policy and social security, highlighting Modigliani’s seminal contributions. Over time competing theories have emerged, and some empirical findings are difficult to reconcile with LCH; chiefly aspects of inertia, myopia, and irrational behaviour documented by the recent behavioural literature. But the LCH is still the benchmark model to think about individual saving decisions, the aggregate evidence and policy issues.
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Bibliographic InfoPaper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 140.
Date of creation: 01 May 2005
Date of revision:
Publication status: Published in Banca Nazionale del Lavoro Quarterly Review, June-September 2005, vol. 58, issue 233-243, pages 173-86
Other versions of this item:
- Tullio Jappelli, 2005. "The life-cycle hypothesis, fiscal policy and social security," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 173-186.
- Tullio Jappelli, 2005. "The life-cycle hypothesis, fiscal policy and social security," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 173-186.
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-05-23 (All new papers)
- NEP-MAC-2005-05-23 (Macroeconomics)
- NEP-PUB-2005-05-23 (Public Finance)
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