This paper examines some issues relating to the establishment of defined contribution pension system. First, it shows that the defined benefit pension system could successfully counteract the financial un-sustainability of the pension system, such as defined contribution pension system. Second, it notes that defined contribution pension system requires the pension amount to be endogenous and, as a consequence, the abandonment of the constitutive aim of the pension system e.g., consumption smoothing. Third, it argues that the extending of the retirement age may counteract the aging of the population and achieve financial sustainability, along with the individual well-being.
This paper provides a version of the Lucas Island model which is both completely microfounded and suitable for teaching. By replacing the original overlapping generation structure with the producer-shopper distinction within the household and using the classical perfect information case as the benchmark of the analysis, the model presented here has two key distinctive features. First, it shows in a critical manner how the imperfect information problem actually arises. Second, it avoids a shortcut approach to modelling aggregate demand by adding a money market to the analysis.
This paper develops a teaching apparatus of Lucas's 1972 model aimed at improving students' ability to interpret the underlying structure of modern macroeconomics models. In this respect, the Lucas island model represents the perfect "case study" since it falls into the narrow range of mile stone "modern" macroeconomic models. Our teaching apparatus adds to the Lucas island model three distinctive features. First, it replaces the overlapping generation structure with the producer-shopper distinction within the household; second, it presents the classical perfect information case as the benchmark of the analysis and, finally, introduces a money market into the model.
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