1 / 7

A Danish CGE model including uninsurable idiosyncratic earnings uncertainty

A Danish CGE model including uninsurable idiosyncratic earnings uncertainty. The transition. Building blocks of the model. Same basic structure as “the small model” Benchmark: A.K. OLG model with certainty Forward solution Government sector Endogenous labor supply. The model.

yen
Download Presentation

A Danish CGE model including uninsurable idiosyncratic earnings uncertainty

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. A Danish CGE model including uninsurable idiosyncratic earnings uncertainty The transition

  2. Building blocks of the model • Same basic structure as “the small model” • Benchmark: A.K. OLG model with certainty • Forward solution • Government sector • Endogenous labor supply

  3. The model • Satellite approach • 16 generations, (100 periods) • Danish progressive tax system • Simple Danish PAYG pension system • Backward solution: dynamic programming • Uninsurable idiosyncratic earnings uncertainty - Markov transition probabilities - Progressive taxes act as insurance device

  4. Previous findings • A.K. : progressive taxes are bad • TWP : include idiosyncratic earnings uncertainty Compares two steady states: welfare increases when moving from a proportional to a progressive tax system

  5. Critique • A.K. : certainty, agents have perfect foresight - the benchmark model • TWP: there may be welfare loss in the transition - very time demanding

  6. Goal • A simpler model + a faster computer • (+ a faster program?) • Evaluate welfare change in transition • LSRA

  7. Future agenda • Endogenous Markov transition probabilities and wage bargaining process • Endogenous unemployment probabilities and optimal insurance system • An optimal public sector (taxes, pensions) • Stochastic health shocks and optimal insurance system

More Related