The Effect of Tax-Deferred Retirement Saving Accounts: A Dynamic General Equilibrium Analysis
The present paper constructs a dynamic general-equilibrium OLG model with heterogeneous households and analyzes the effect of tax-deferred retirement saving accounts. When stylized 401(k)-type accounts are introduced, the government tax revenue decreases by 26% in the short run and by 15% in the long run. If the government finances these costs by a onetime income tax increase with government debt, it has to raise the marginal tax rates by 31% to make the policy change sustainable. National wealth and output will decline by 1.4% and 2.8%, respectively, in the long run, and households of all cohorts will be worse off.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA|
Web page: http://www.EconomicDynamics.org/
More information through EDIRC
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.:
- Jagadeesh Gokhale & Laurence J. Kotlikoff & Mark J. Warshawsky, 2001.
"Life-Cycle Saving, Limits on Contributions to DC Pension Plans, and Lifetime Tax Benefits,"
NBER Working Papers
8170, National Bureau of Economic Research, Inc.
- Jagadeesh Gokhale & Laurence J. Kotlikoff & Mark J. Warshawsky, 2001. "Life-cycle saving, limits on contributions to DC pension plans, and lifetime tax benefits," Working Paper 0102, Federal Reserve Bank of Cleveland.
- Steven F. Venti & David A. Wise, 1987.
"Have IRAs Increased U.S. Saving?: Evidence from Consumer Expenditure Surveys,"
NBER Working Papers
2217, National Bureau of Economic Research, Inc.
- Steven F. Venti & David A. Wise, 1990. "Have IRAs Increased U. S. Saving?: Evidence from Consumer Expenditure Surveys," The Quarterly Journal of Economics, Oxford University Press, vol. 105(3), pages 661-698.
When requesting a correction, please mention this item's handle: RePEc:red:sed009:957. 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: (Christian Zimmermann)
If references are entirely missing, you can add them using this form.