1. Life cycle savings and consumption constraints: theory, empirical evidence, and fiscal implications.
- Author
-
Borsch-supan A and Stahl K
- Subjects
- Adult, Age Factors, Demography, Developed Countries, Europe, Family, Family Characteristics, Financial Management, Germany, West, Population, Population Characteristics, Research, Socioeconomic Factors, Aged, Behavior, Economics, Income, Life Cycle Stages, Methods, Models, Theoretical, Taxes
- Abstract
"Recent tests of both the pure and the extended life cycle hypothesis have generated inconclusive results on the life cycle behavior of the elderly. We extend the life cycle model by introducing a constraint on the physical consumption opportunities of the elderly which, if binding, imposes a consumption trajectory declining in age. This explains much of the received evidence on the elderly's consumption and savings behavior, in particular declining consumption, and increasing savings and wealth with increasing age. Our analysis of [Federal Republic of Germany] data gives additional support to our theory. We finally draw the implications of the theory on the incidence of consumption and income (wealth) taxes, and on the recent (inconclusive) tests of intergenerational altruism.", (excerpt)
- Published
- 1991
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