109 research outputs found
Online Appendix to Efficient Timing of Retirement
Post-retirement, the model in the main text (published in the Review of Economic Dynamics) reduces to the Merton (1969) problem, which has of course an exact solution. Pre-retirement, however, the agent holds an American option, namely, retire now or keep working. Problems involving American options are generally difficult to solve exactly. This appendix describes an approximate solution to the agent's pre-retirement problem.retirement, life cycle model, optimal stopping problem
Currency preferences and the Australian dollar
We investigate the theory and empirics of currency substitution and currency complementarity. Analytical tractability is facilitated by focussing on a small currency. Data spanning 1985 to the turn of the century contain evidence of the Australian dollar’s substitution for the mark and complementarity with the yen, consistent with our theory that international variables will in general affect the demand for domestic money. Our theory also predicts third-currency effects, and the data reveal several of these. For example, rises in the US Federal Funds rate were associated with depreciations of the Australian dollar against the yen, controlling for the spread between interest rates in Australia and Japan.Atemporally non-separable preferences; Money demand; Cash in advance; Third-currency effects; Uncovered Interest Parity
Life cycle insurance, bequest motives and annuity loads
We investigate insurance purchases when bequest motives are age-varying and
life insurance and life annuities both carry loads. The existing life cycle
literature assumes bequests are normal goods without being either necessities
or luxuries. Much of the literature also assumes implicitly that life annuity
loads are negative. A key finding of the literature is that the demand for life
insurance and the demand for life annuities are symmetrical. It is optimal to
buy life-contingent insurance throughout life, even under loads. A life annuity
phase backs directly onto a life insurance phase. We find that realistic
examples with positive loads on both products reveal up to two distinct periods
of non-participation, one in midlife and the other adjoining the maximum age.
We highlight examples with necessity bequests during child-rearing years and
luxury bequests thereafter. This set of assumptions explains why a substantial
demand for life insurance during child-rearing years can co-exist with
negligible demand for life annuities later on. A realistic 18% load on both
products generates this outcome.Comment: To appear in Journal of Economic Dynamics and Contro
On the theory of inflation in open economies
The theoretical literature provides straightforward answers to
questions of the general form: what are the long-run effects on inflation
at home and abroad of a sustained increase in monetary growth
at home? It is less informative, however, about questions of the kind:
what are the long-run effects on monetary growth and inflation at home
and abroad of a sustained increase in the gap between public purchases
of home output and net explicit taxes on home incomes?
Building on the work of Cagan (1956), Christ (1968), Turnovsky
(1977) and others, this dissertation addresses the latter type of
question. Various other short-run and long-run effects of expansionary
public policy are also considered. Finally, stability, and (less
frequently) existence and uniqueness properties are investigated.
For these purposes, a static Keynes-Phillips model is embedded
in a dynamic model of the creation of public debt, the formation of
CPI and exchange-rate expectations, and movements in the terms of trade;
the main analytical novelty being full accounting for the effects of
inflation, interest and growth on the budget constraints of the public
and private sectors.
Note, however, that the foregoing static and dynamic elements
are invoked selectively, depending on considerations of simplicity,
the particular problem at hand, and the relevant time horizon (cf.
Henderson (1977)). The notion of a hierarchy of successively longer
time spans is the central organizing principle of the analysis. Four different time horizons are considered. In the shortest run, investigated in Chapters III and IV, real
intensive output is predetermined. Results in this setting include a
variable-inflation analogue of the Dornbusch (1976c) result on exchangerate
overshoot.
Over the next horizon, output is demand-determined and inflation
expectations are predetermined. One exercise suggested by this framework
is a synthesis of repercussion-multiplier and Phillips-Curve
notions; see Chapter IV.
In the longer-run analyses, output is fixed at capacity and
expectations are realized. An "inter-run" variant assumes further
that national public sectors are able to hold down nominal rates of
interest, and/or that external accounts are in a state of "quasi
equilibrium" (cf. Mundell (1968)). It is then shown, for example,
that the effect on a small country's disposable income of an increase
In public spending on the home good is glven by the inverse of the
standard Marshall-Lerner expression; see Chapters II and III.
In the longest run, nominal rates of interest fully reflect
the Fisher effect, and external accounts are in full equilibrium. It
is shown that over such a time span, the implementation of a constant
monetary growth rule would have to be accompanied by an "accommodating"
fiscal policy; see Chapter IV.
On the other hand, suppose that monetary growth is endogenous
In every country, and reconsider the problem posed at the outset. Then:
(1) the domestic and foreign inflationary effects of an increased
budget deficit at home are independent of relative economic size;
(2) either in a "reserve-currency" country, or in any country under flexible rates, the disturbance in question will induce a more than
proportional increase in domestic monetary growth; (3) rates of monetary
growth abroad will rise pari passu or remain unchanged according as
whether the domestic economy is a reserve-currency country or under
flexible rates; (4) higher budget deficits in "peripheraV' countries
will not affect monetary growth anywhere.
These and other fiscal analogues of more-familiar propositions
concerning the international transmission of monetary disturbances
are established in Chapter IV
Older adults and “scams”: Evidence from the Mass Observation Archive
Purpose
The issue of financial abuse is highlighted the Care Act (2014). One category of financial abuse is consumer fraud or “scams”. Evidence suggests that scams are becoming increasingly ubiquitous, yet how scams impact older adults remains under-researched. This paper reports the data from 80 older adults’ written response to a Mass Observation Archive Directive, commissioned in autumn 2015, focusing on scams.
Study design/methodology/approach
A qualitative approach was utilised with data captured via written responses to a set of questions. There was no limit on the length of written accounts and respondents remained anonymous. Data were analysed thematically, resulting in 4 key themes.
Findings
The data indicated scams impact individuals in terms of health and wellbeing, irrespective of whether they have experienced financial loss, and trigger implementation of strategies intended to avoid being defrauded. There was also evidence of scam related stigma with individuals who are defrauded being subject to derision and censure.
Originality/value
This paper adopts an original approach to collecting rich, candid data about an under-researched topic. The authors highlight that anti-scam interventions should equip individuals to identify and avoid scams without inciting fear or anxiety; proposing this may be facilitated by drawing on health and safety risk assessment protocol when designing anti-scam interventions.
Social implications
Individuals who have been victimised by fraudsters may need access to practical and emotional support. This requires the design of appropriate interventions and the stigma associated with being scammed to be addressed
- …