Durable consumption, saving and retirement
Durables yield services through life but are also a store of value and both features may have important implications for savings and retirement decisions. Durables also affect bequests and thus induce intergenerational transfers. We show that allowing explicitly for durables has important implications for retirement decisions and responses to various changes in the environment. An improvement in the possibility of freeing housing capital makes the old retire earlier (income effect) while the young plan to retire later since they increase housing demand and reduce financial savings. Considering welfare in stationary equilibrium, we find that a reduction in wealth locking-in in durables is not necessarily welfare improving due to the effects on bequests. From a social welfare perspective, individuals tend to choose too much financial savings, too little durable acquisition and too early retirement. Copyright Springer-Verlag Berlin Heidelberg 2014
Volume (Year): 27 (2014)
Issue (Month): 3 (July)
|Contact details of provider:|| Web page: http://www.springer.com|
More information through EDIRC
|Order Information:||Web: http://www.springer.com/economics/population/journal/148/PS2|
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.:
- Peter Zweifel & Stefan Felder & Markus Meiers, 1999. "Ageing of population and health care expenditure: a red herring?," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 485-496.
- David E. Bloom & David Canning & Rick Mansfield & Michael Moore, 2006.
"Demographic Change, Social Security Systems, and Savings,"
NBER Working Papers
12621, National Bureau of Economic Research, Inc.
- Bloom, David E. & Canning, David & Mansfield, Richard K. & Moore, Michael, 2007. "Demographic change, social security systems, and savings," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 92-114, January.
- Romer, Paul M, 1986.
"Increasing Returns and Long-run Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 94(5), pages 1002-37, October.
- Andreas Werblow & Stefan Felder & Peter Zweifel, 2007. "Population ageing and health care expenditure: a school of 'red herrings'?," Health Economics, John Wiley & Sons, Ltd., vol. 16(10), pages 1109-1126.
- Holger Kraft & Claus Munk, 2011. "Optimal Housing, Consumption, and Investment Decisions over the Life Cycle," Management Science, INFORMS, vol. 57(6), pages 1025-1041, June.
- Batljan, Ilija & Lagergren, Mårten, 2004. "Inpatient/outpatient health care costs and remaining years of life--effect of decreasing mortality on future acute health care demand," Social Science & Medicine, Elsevier, vol. 59(12), pages 2459-2466, December.
- Vincent P. Crawford & David M. Lilien, 1981. "Social Security and the Retirement Decision," The Quarterly Journal of Economics, Oxford University Press, vol. 96(3), pages 505-529.
- Torben M. Andersen & Joydeep Bhattacharya, 2014.
"A dynamic-efficiency rationale for public investment in the health of the young,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 47(3), pages 697-719, August.
- Andersen, Torben M & Bhattacharya, Joydeep, 2013. "A Dynamic Efficiency Rationale for Public Investment in the Health of the Young," Staff General Research Papers 35872, Iowa State University, Department of Economics.
- Andersen, Torben M & Bhattacharya, Joydeep, 2012. "A Dynamic Efficiency Rationale for Public Investment in the Health of the Young," Staff General Research Papers 35503, Iowa State University, Department of Economics.
- Pierre Pestieau & Grégory Ponthière, 2012.
"The public economics of increasing longevity,"
PSE Working Papers
- Pierre Pestieau & Grégory Ponthière, 2012. "The public economics of increasing longevity," PSE - Labex "OSE-Ouvrir la Science Economique" hal-00813211, HAL.
- PESTIEAU, Pierre & PONTHIERE, Grégory, . "The public economics of increasing longevity," CORE Discussion Papers RP 2464, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- PESTIEAU, Pierre & PONTHIERE, Grégory, 2012. "The public economics of increasing longevity," CORE Discussion Papers 2012005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Torben M. Andersen & Marias H. Gestsson, 2010. "Longevity, Growth and Intergenerational Equity - The Deterministic Case," Economics Working Papers 2010-19, Department of Economics and Business Economics, Aarhus University.
- repec:hal:wpaper:halshs-00676492 is not listed on IDEAS
- David Blake, 2004.
"The impact of wealth on consumption and retirement behaviour in the UK,"
Applied Financial Economics,
Taylor & Francis Journals, vol. 14(8), pages 555-576.
- David Blake, 2002. "The impact of wealth on consumption and retirement behaviour in the UK," LSE Research Online Documents on Economics 24949, London School of Economics and Political Science, LSE Library.
- Martin Farnham & Purvi Sevak, 2007. "Housing Wealth and Retirement Timing," Working Papers wp172, University of Michigan, Michigan Retirement Research Center.
- Torben M. Andersen & Marias H. Gestsson, 2010. "Longevity, Growth and Intergenerational Equity - The Deterministic Case," Economics wp52, Department of Economics, Central bank of Iceland.
- Bodie, Zvi & Merton, Robert C. & Samuelson, William F., 1992.
"Labor supply flexibility and portfolio choice in a life cycle model,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 16(3-4), pages 427-449.
- Zvi Bodie & Robert C. Merton & William F. Samuelson, 1992. "Labor Supply Flexibility and Portfolio Choice in a Life-Cycle Model," NBER Working Papers 3954, National Bureau of Economic Research, Inc.
- Peter A. Diamond, 2003.
"Taxation, Incomplete Markets, and Social Security,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262042134, June.
- Andersen, Torben M., 2008. "Increasing longevity and social security reforms--A legislative procedure approach," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 633-646, April.
- Pecchenino, Rowena A & Pollard, Patricia S, 1997.
"The Effects of Annuities, Bequests, and Aging in an Overlapping Generations Model of Endogenous Growth,"
Royal Economic Society, vol. 107(440), pages 26-46, January.
- Rowena A. Pecchenino & Patricia S. Pollard, 1995. "The effects of annuities, bequests, and aging in an overlapping generations model of endogenous growth," Working Papers 1995-008, Federal Reserve Bank of St. Louis.
- Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, June.
- Maria Chiuri & Tullio Jappelli, 2010.
"Do the elderly reduce housing equity? An international comparison,"
Journal of Population Economics,
Springer;European Society for Population Economics, vol. 23(2), pages 643-663, March.
- Chiuri, Maria Concetta & Jappelli, Tullio, 2008. "Do the elderly reduce housing equity? An international comparison," CFS Working Paper Series 2008/20, Center for Financial Studies (CFS).
- Maria Concetta Chiuri & Tullio Jappelli, 2006. "Do the elderly reduce housing equity? An international comparison," CSEF Working Papers 158, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Merton, Robert C, 1969. "Lifetime Portfolio Selection under Uncertainty: The Continuous-Time Case," The Review of Economics and Statistics, MIT Press, vol. 51(3), pages 247-57, August.
- Fang Yang, 2009.
"Consumption over the Life Cycle: How Different is Housing?,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 12(3), pages 423-443, July.
- Fang Yang, 2008. "Code and data files for "Consumption over the Life Cycle: How Different is Housing?"," Computer Codes 06-210, Review of Economic Dynamics.
- Chang, Fwu-Ranq, 1991. "Uncertain Lifetimes, Retirement and Economic Welfare," Economica, London School of Economics and Political Science, vol. 58(230), pages 215-32, May.
- Černý, Aleš & Miles, David & Schmidt, L'Ubomír, 2010.
"The impact of changing demographics and pensions on the demand for housing and financial assets,"
Journal of Pension Economics and Finance,
Cambridge University Press, vol. 9(03), pages 393-420, July.
- Cerny, Ales & Miles, David K & Schmidt, Lubomir, 2005. "The Impact of Changing Demographics and Pensions on The Demand for Housing and Financial Assets," CEPR Discussion Papers 5143, C.E.P.R. Discussion Papers.
- Hu, Sheng Cheng, 1979. "Social Security, the Supply of Labor, and Capital Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 274-83, June.
- Joao F. Cocco, 2005. "Portfolio Choice in the Presence of Housing," Review of Financial Studies, Society for Financial Studies, vol. 18(2), pages 535-567.
When requesting a correction, please mention this item's handle: RePEc:spr:jopoec:v:27:y:2014:i:3:p:825-840. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.