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Intergenerational Sharing of Unhedgeable Inflation Risk

Author

Listed:
  • Chen, Damiaan
  • Beetsma, Roel
  • van Wijnbergen, Sweder

Abstract

We explore how members of a collective pension scheme can share inflation risks in the absence of suitable financial market instruments. Using intergenerational risk sharing arrangements, risks can be allocated better across the various participants of a collective pension scheme than would be the case in a strictly individual- or cohort-based pension scheme, as these can only lay off risks via existing financial market instruments. Hence, intergenerational sharing of these risks enhances welfare. In view of the sizes of their funded pension sectors, this would be particularly beneficial for the Netherlands and the U.K.

Suggested Citation

  • Chen, Damiaan & Beetsma, Roel & van Wijnbergen, Sweder, 2022. "Intergenerational Sharing of Unhedgeable Inflation Risk," CEPR Discussion Papers 17720, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17720
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    2. Schütz, Marlies & Ploder, Michael & Polt, Wolfgang & Kattel, Rainer & Czarnitzki, Dirk, 2025. "Zeit für eine Industriepolitik in Deutschland? Eine Auseinandersetzung mit Rechtfertigungen, Risiken und Rahmenbedingungen," Studien zum deutschen Innovationssystem 4-2025, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.

    More about this item

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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