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Title: Government Deby, Bequests, and Life Insurance

Citation Type: Miscellaneous

Publication Year: 2009

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Abstract: This paper explores the e ect of government debt on private wealth accumulation.Speci cally, this paper observes savings behavior by examining the e ect of governmentdebt on life insurance in force. The benchmark estimates suggest that a 10% increase instate government debt causes a 0.9% increase in life insurance in force. Also, a 10% in-crease in federal government debt causes a 4% increase in life insurance in force. Basedon these elasticities, in response to a 1 dollar increase in state and federal governmentdebts, life insurance in force increases by $0.10 and $0.16, respectively. These resultsprovide evidence that households attempt to partially cancel out the scal burden ofgovernment debt it is leaving for the future. Furthermore, several sensitivity tests arepresented to rule out demographic e ects that may be potentially driving the resultsin this paper.

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Authors: Hoang, Edward

Publisher: Memphis University

Data Collections: IPUMS CPS

Topics: Other

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