Stimulating annuity markets

Heijdra, B. J., Mierau, J. O. & Trimborn, T., Oct-2017, In : Journal of Pension Economics and Finance. 16, 4, p. 554-583 30 p.

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  • Stimulating annuity markets

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We study the short-, medium-, and long-run implications of stimulating annuity markets in a dynamic general-equilibrium overlapping-generations model. We find that beneficial partial-equilibrium effects of stimulating annuity markets are counteracted by negative general-equilibrium repercussions. Balancing the positive partial-equilibrium and negative general-equilibrium forces we show that there exists an intermediate level of annuitization such that the lifetime utility of steady-state agents is maximized. Studying the transition to this optimal degree of annuitization shows that currently middle-aged individuals stand to gain most from the stimulation of annuity markets. Complementing our main analysis, we highlight the centrality of the interplay between human-capital accumulation and annuity market policy.
Original languageEnglish
Pages (from-to)554-583
Number of pages30
JournalJournal of Pension Economics and Finance
Issue number4
Early online date16-Apr-2016
Publication statusPublished - Oct-2017


  • EARNINGS, GROWTH, HUMAN-CAPITAL ACCUMULATION, LIFE-CYCLE, DEMOGRAPHIC-CHANGE, SOCIAL-SECURITY, WELFARE, CONSUMPTION, MODEL, overlapping generations, Individual welfare, annuity markets, computable general equilibrium

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