Modelling private wealth accumulation and spend-down in the Italian microsimulation model CAPP_DYN: A life-cycle approach

Tedeschi, Simone, Pisano, Elena, Mazzaferro, Carlo and Morciano, Marcello (2013) Modelling private wealth accumulation and spend-down in the Italian microsimulation model CAPP_DYN: A life-cycle approach. International Journal of Microsimulation, 6 (2). pp. 76-122. ISSN 1747-5864

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Abstract

In microsimulation literature a limited number of models include a module aimed at analyzing and projecting the evolution of private wealth over time. However, this issue appears crucial in order to comprehensively evaluate the likely distributional effects of institutional reforms adopted to cope with population ageing. In this work we describe the implementation in the Italian dynamic micro simulation model CAPP_DYN of a new module in which households’ savings and asset allocation are modelled. In particular, we aim to account for possible behavioural responses to pension reforms in household savings. To this end, we rely on an approximate life cycle structural framework for estimating saving behaviour, while adopting a traditional stochastic micro simulation approach for asset allocation. In line with Ando and Nicoletti Altimari (2004), we emphasize the role of lifetime economic resources in households’ consumption decisions, yet we further account for internal habit formation and subjective expectations on pension outcomes in the econometric stage. In addition, we model intergenerational transfers of private wealth in a probabilistic fashion.

Item Type: Article
Faculty \ School: Faculty of Medicine and Health Sciences > Norwich Medical School
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Depositing User: Pure Connector
Date Deposited: 07 Oct 2014 12:40
Last Modified: 31 Oct 2022 15:31
URI: https://ueaeprints.uea.ac.uk/id/eprint/50417
DOI:

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