TY - JOUR
T1 - Note on longevity and aggregate savings
AU - Sheshinski, Eytan
PY - 2006/7
Y1 - 2006/7
N2 - In a recent paper in this journal, Bloom, Canning and Graham (2003) model the effect of changes in longevity on individual savings. They proceed to present empirical findings about the relation between longevity and aggregate savings. There is a missing link between their empirics and theory: the changes in the populations age density distribution due to increased longevity. This note provides such an aggregation analysis within a simple model with uncertain survival, endogenous life-cycle consumption and retirement age. It is shown that, with continuous annuitization, an increase in expected longevity raises aggregate steady-state savings. The magnitude of this effect depends on the economy's age-specific distribution and on the elasticity of optimum retirement to changes in longevity.
AB - In a recent paper in this journal, Bloom, Canning and Graham (2003) model the effect of changes in longevity on individual savings. They proceed to present empirical findings about the relation between longevity and aggregate savings. There is a missing link between their empirics and theory: the changes in the populations age density distribution due to increased longevity. This note provides such an aggregation analysis within a simple model with uncertain survival, endogenous life-cycle consumption and retirement age. It is shown that, with continuous annuitization, an increase in expected longevity raises aggregate steady-state savings. The magnitude of this effect depends on the economy's age-specific distribution and on the elasticity of optimum retirement to changes in longevity.
KW - Longevity
KW - Retirement
KW - Savings
UR - http://www.scopus.com/inward/record.url?scp=33746547999&partnerID=8YFLogxK
U2 - 10.1111/j.1467-9442.2006.00451.x
DO - 10.1111/j.1467-9442.2006.00451.x
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AN - SCOPUS:33746547999
SN - 0347-0520
VL - 108
SP - 353
EP - 356
JO - Scandinavian Journal of Economics
JF - Scandinavian Journal of Economics
IS - 2
ER -