search query: @author Pemberton, J. / total: 9
reference: 2 / 9
| Author: | Pemberton, J. |
| Title: | The empirical failure of the life cycle model with perfect capital markets |
| Journal: | Oxford Economic Papers
1997 : APR, VOL. 49:2, p. 129-151 |
| Index terms: | CAPITAL MARKETS LIFE CYCLES MODELS |
| Language: | eng |
| Abstract: | The article formulates and calibrates a life cycle model whose structure is similar to that of Modigliani (1986). The results turn the standard life cycle prediciton on its head: instead of consumption being smoothed over life by the accumulation of wealth in working life which is then run down during retirement, smoothing involves borrowing during working life, and repayment during retirement. Contrary to the standard assumption in life cycle contexts, income during retirement is not lower on average than income during working life. The poorest phase of the life cycle is typically the first third to half of working life. The framework of of far-sighted forward-looking consumers operating in perfect markets does not offer an acceptable approximation of reality. This has considerable implications for research. |
SCIMA