Several important empirical studies (e.g., Altonji, Hayashi, and Kotlikoff, 1992, 1996, 1997) find that households are not altruistically-linked in a way consistent with the standard Ricardian model, as put forward by Barro (1974). We build a two-sided altruistic-linkage model in which private...

The present paper analyzes the budgetary, macroeconomic, and welfare effects of tax-deferred retirement saving accounts, similar to U.S. 401(k) plans, in a dynamic general-equilibrium overlapping-generations economy with heterogeneous households. Because of the initial deferral of tax payments,...

The current U.S. Social Security program redistributes resources from high wage workers to low wage workers and from two-earner couples to one-earner couples. The present paper extends a standard general-equilibrium overlapping-generations model with uninsurable wage shocks to analyze the effect...

The present paper constructs a dynamic general-equilibrium OLG model with heterogeneous households and analyzes the effect of tax-deferred retirement saving accounts. When stylized 401(k)-type accounts are introduced, the government tax revenue decreases by 26% in the short run and by 15% in the...

This paper describes a stochastic overlapping generations (OLG) model with heterogeneous agents, which is one of five models used at the Congressional Budget Office for recent fiscal policy analyses. In this model economy, households are heterogeneous with respect to their age, wealth holding,...

This paper extends the heterogeneous agent overlapping generations model with bequests in Nishiyama (2000) by adding two-way intergenerational altruism and inter vivos transfers. Calibrating the model to the U.S. economy, the paper measures time preference and intergenerational altruism...

Several important empirical studies (for example, Altonji, Hayashi, and Kotlikoff, 1992, 1996, 1997) have found that households are not altruistically linked in a way consistent with the standard Ricardian model, as put forward by Barro (1974). We built a two-sided altruistic-linkage model in...

This paper explores the effects of a simple policy change—a 10 percent tax cut—to shed light on the different models CBO uses to examine the macroeconomic effects of policy changes. Most of the models predict that such a simple tax cut will increase GDP and therefore that the revenue loss...

The economic literature shows that privatizing Social Security can improve labor supply incentives, but it can also reduce risk sharing when households face uninsurable risks. We simulate a stylized 50-percent privatization with transaction costs financed by consumption taxes and examined its...