This suggests that existing structural form estimations of the relationship between retirement and health which exclude retirement age from health equations are not theoretically valid. In particular, thrifty people are found to live longer lives. We develop a frontier model that both uses this information and provides evidence as to its quality. We also construct three simpler estimators that are useful when researchers deem the information to be perfect. The problem involves a complete set of Arrow-Debreu securities, each of which pays a positive return in only one state.
Intuition is provided for the case of constant relative risk aversion.
Protectionist Reputations and the Threat of Voluntary Export Restraints. Inflation Variability and Gradualist Monetary Policy. Published in Review of Economic Studies . A macro model is specified in which inflation is stochastically related to money growth, with unobservable time-varying autonomous and induced components. Our model implies that a gradual policy is always optimal, and explains the dichotomy between moderate inflation countries that adopt gradual money growth reduction and high inflation countries that adopt a sharper reduction in money growth.