IDEAS home Printed from https://ideas.repec.org/a/oup/oxecpp/v49y1997i2p129-51.html
   My bibliography  Save this article

The Empirical Failure of the Life Cycle Model with Perfect Capital Markets

Author

Listed:
  • Pemberton, James

Abstract

This paper calibrates a life cycle model which incorporates standard assumptions, similar to those in F. Modgliani's (1986) 'stripped down' version, including perfect capital markets. The resulting model generates strongly counterfactual predictions: planned wealth is negative for all or most of life, following a W-shaped rather than a hump-shaped profile. (Equivalently, the debt profile is M-shaped.) The paper argues that introducing capital market imperfections can resolve many of the problems, though some issues remain, and further research is warranted. Copyright 1997 by Royal Economic Society.

Suggested Citation

  • Pemberton, James, 1997. "The Empirical Failure of the Life Cycle Model with Perfect Capital Markets," Oxford Economic Papers, Oxford University Press, vol. 49(2), pages 129-151, April.
    • Handle: RePEc:oup:oxecpp:v:49:y:1997:i:2:p:129-51
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0030-7653%28199704%292%3A49%3A2%3C129%3ATEFOTL%3E2.0.CO%3B2-O&origin=bc
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pemberton, James, 1999. "Social Security: National Policies with International Implications," Economic Journal, Royal Economic Society, vol. 109(457), pages 492-508, July.
    2. Andrew Benito, 2002. "Does Job Insecurity Affect Household Consumption?," Working Papers 0225, Banco de España.
    3. Rossi, Mariacristina, 2005. "Households’ Consumption under the Habit Formation Hypothesis. Evidence from Italian Households using the Survey of Household Income and Wealth (SHIW)," Economics Discussion Papers 8886, University of Essex, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:oxecpp:v:49:y:1997:i:2:p:129-51. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/oep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.