Illiquid Life Annuities

d'Albis, Hippolyte and Etner, Johanna (2013): Illiquid Life Annuities.

Abstract

In this article, we consider illiquid life annuity contracts and show that they may be preferred to Yaari (1965)’s liquid contracts. In an overlapping-generation economy, liquid life annuities are demanded only if the equilibrium is dynamically inefficient. Alternatively, an equilibrium displaying a positive demand for illiquid life annuities is efficient. In this latter case, the welfare at steady-state is larger if illiquid life annuity contracts are available.

• Item Type: MPRA Paper
• Language: English
• Keywords: Lifes Annuities; Overlapping generation models
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory

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