A firm theoretical basis for the empirical relationship between dependency rates and savings behavior in developing countries is still lacking. Two demographic extensions of the representative household’s stochastic dynamic optimization problem are presented here. It is shown that the...

The optimal provision of loan guarantees or deposit insurance is examined in the context of an overlapping generations model. It is demonstrated that even in the face of a market imperfection that precludes diversification of the private sector’s loan portfolio to eliminate risk, full...