Department of Economics and Business Economics

Durable consumption, saving and retirement

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review

Durables yield services through life but are also a store of value and both features may have important implications for savings and retirement decisions. Durables also affect bequest and thus induce intergenerational transfers. We show that allowing explicitly for durables has important implications for retirement decisions and responses to various changes in the environment. An improvement in the possibility of freeing housing capital makes the old retire earlier (income effect) while the young plan to retire later since they increase housing demand and reduce financial savings. Considering welfare in stationary equilibrium, we find that a redution in wealth locking-in in durables is not necessarily welfare improving due to the effects on bequest. From a social welfare perspective, individuals tend to choose too much financial savings, too little durable acquisition and too early retirement.
Original languageEnglish
JournalJournal of Population Economics
Pages (from-to)825-840
Number of pages16
Publication statusPublished - 2014

Bibliographical note

Campus adgang til artiklen / Campus access to the article

    Research areas

  • Durable consumption, Retirement, Housing, Wealth decumulation, Bequests

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