We investigate the optimal savings decisions for investors with access to pre-tax (traditional) and post-tax (Roth) versions of tax-advantaged retirement accounts. The model features a progressive tax schedule and uncertainty over future tax rates. Traditional accounts are valuable for hedging...

The economic profession has widely examined the effects of the pension system on economic efficiency, intergenerational fairness and the sustainability of public finances, while less attention has been paid to the political decision making process. Yet, the essence of the problem is arguably a...