This paper examines the optimal allocation of risk in an overlapping-generations economy. It compares the allocation of … risk the economy reaches naturally to the allocation that would be reached if generations behind a Rawlsian quot;veil of … ignorancequot; could share risk with one another through complete Arrow-Debreu contingent-claims markets. The paper then examines …

model with idiosyncratic labor income risk. In our model economy, even a moderate earnings testing reduces individuals …

the magnitude of the optimal paygo program and the nature of the underlying risk sharing effects are very sensitive to the … chosen combination of risk concepts and stochastic specification of long run aggregate wage income growth. In an additive way … we distinguish between the pooling of wage and capital risks within periods and two different intertemporal risk sharing …

The theoretical literature presumes generational risk is large enough to merit study and that such risk can be … to directly measure generational risk and the extent to which it can be mitigated via financial markets or Social … Security. Depending on our yardstick, generational risk, whether across non-overlapping generations or across overlapping …

-generational transmission of wealth. Financial markets are incomplete, exposing agents to both labor income and capital income risk. We show … that the stationary wealth distribution is a Pareto distribution in the right tail and that it is capital income risk …

The theoretical literature presumes generational risk is large enough to merit study and that such risk can be … technique to overcome the curse of dimensionality and measure generational risk in an 80-period OLG model. The model features … isoelastic preferences, moderate risk aversion, Cobb-Douglas technology, and shocks to both TFP and capital depreciation …