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"Are tax incentives the best way to encourage people to save for retirement? This publication assesses whether countries can improve the design of financial incentives to promote savings for retirement. After describing how different countries design financial incentives to promote savings for retirement in funded pensions, the study calculates the overall tax advantage that individuals may benefit from as a result of those incentives when saving for retirement. It then examines the fiscal cost of those incentives and their effectiveness in increasing retirement savings, and looks into alternative approaches to designing financial incentives. The study ends with policy guidelines on how to improve the design of financial incentives to promote savings for retirement, highlighting that depending on the policy objective certain designs of tax incentives or non-tax incentives may be more appropriate."--Page 4 of cover.

Retirement --- Tax incentives. --- Saving and investment. --- Pension trusts. --- Investments --- Planning. --- Taxation. --- Employee pension trusts --- Pension funds --- Pension plans --- Trusts and trustees --- Accumulation, Capital --- Capital accumulation --- Capital formation --- Investment and saving --- Saving and thrift --- Capital --- Supply-side economics --- Wealth --- Incentives, Tax --- Tax subsidies --- Taxation --- Tax expenditures --- Retirement planning

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Emerging markets are more volatile and face different types of shocks, in size and nature, compared to their developed counterparts. Accurate identification of the stochastic properties of shocks is difficult. We show evidence suggesting that uncertainty about the underlying stochastic process is present in commodity prices. In addition, we build a dynamic stochastic general equilibrium model with informational frictions, which explicitly considers uncertainty about the nature of shocks. When formulating expectations, the economy assigns some probability to the shocks being temporary even if they are actually permanent. Parameter instability in the stochastic process implies that optimal saving levels (debt holdings) should be higher (lower) compared to a process with fixed parameters. Imperfect information about the nature of shocks matters when commodity GDP shares are high. Thus, economic policies based on misperception of the underlying regime can lead to substantial over/under saving with important associated costs.

Prices --- Saving and investment --- Accumulation, Capital --- Capital accumulation --- Capital formation --- Investment and saving --- Saving and thrift --- Capital --- Supply-side economics --- Wealth --- Investments --- Econometric models. --- Investments: Commodities --- Econometrics --- Macroeconomics --- Commodity Markets --- Macroeconomics: Consumption --- Saving --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- Investment & securities --- Econometrics & economic statistics --- Commodity prices --- Commodities --- Consumption --- Markov-switching models --- Commodity price fluctuations --- Commercial products --- Economics --- Econometric models --- Chile

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A common assumption in standard economic models is that agents are risk-averse and prudent, and it is often argued that prudence is necessary to generate precautionary savings. This paper shows that prudence is not necessary to generate precautionary savings in small open economy models with more than two periods. A new class of preferences, which enables the isolation of the effect of risk aversion on precautionary savings, is introduced. The effects of changes in risk aversion, interest rates, and persistence and volatility of shocks on average asset holdings are qualitatively identical to the ones observed for standard constant-elasticity-of-substitution preferences. These results show that the almost universal assertion in the literature - that only prudent consumers can generate positive levels of precautionary savings - is simply incorrect.

Saving and investment --- Prices --- Accumulation, Capital --- Capital accumulation --- Capital formation --- Investment and saving --- Saving and thrift --- Capital --- Supply-side economics --- Wealth --- Investments --- Econometric models. --- Banks and Banking --- Exports and Imports --- Macroeconomics --- Macroeconomics: Consumption --- Saving --- International Finance: General --- Open Economy Macroeconomics --- Interest Rates: Determination, Term Structure, and Effects --- International Investment --- Long-term Capital Movements --- Finance --- International economics --- Precautionary savings --- Consumption --- Real interest rates --- Foreign assets --- National accounts --- Financial services --- External position --- Economics --- Interest rates --- Investments, Foreign --- Mexico

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Policymakers in oil-exporting countries confront the question of how to allocate oil revenues among consumption, saving, and investment in the face of high income volatility. We study this allocation problem in a precautionary saving and investment model under uncertainty. Consistent with data in the 2000s, precautionary saving is sizable and the marginal propensity to consume out of permanent shocks is below one, in stark contrast to the predictions of the perfect foresight model. The optimal investment rate is high if productivity in the tradable sector is high enough.

Exports --- Petroleum --- Saving and investment --- Accumulation, Capital --- Capital accumulation --- Capital formation --- Investment and saving --- Saving and thrift --- Capital --- Supply-side economics --- Wealth --- Investments --- Coal-oil --- Crude oil --- Oil --- Caustobioliths --- Mineral oils --- International trade --- Econometric models. --- Macroeconomics --- Production and Operations Management --- Macroeconomics: Consumption --- Saving --- Investment --- Intangible Capital --- Capacity --- Fiscal Policy --- Intertemporal Consumer Choice --- Life Cycle Models and Saving --- Aggregate Factor Income Distribution --- Macroeconomics: Production --- Income --- Consumption --- Income shocks --- Precautionary savings --- Productivity --- Economics --- Industrial productivity

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Household savings rates in the United States have recently crept up from all-time lows. Some have suggested that a shift toward frugality will hamper GDP growth-the Keynesian "paradox of thrift." We estimate that households compensate for a fall in their asset income by saving more out of their labor income, dollar-for-dollar. In the wake of the crisis, our model predicts that such primary savings will increase, but only temporarily and modestly, as household assets stabilize. As savings flows gradually accumulate, they help rebuild corporate net worth and hence firms' capacity to make capital investments. A timely return to pre-crisis levels of capital investment would require that U.S. households save substantially more than the model predicts, starting now. Hence, we should fret that our savings rates may be too low.

Saving and investment --- Income --- Wealth --- Econometric models. --- Affluence --- Distribution of wealth --- Fortunes --- Riches --- Family income --- Household income --- Personal income --- Accumulation, Capital --- Capital accumulation --- Capital formation --- Investment and saving --- Saving and thrift --- Business --- Economics --- Finance --- Capital --- Money --- Property --- Well-being --- Gross national product --- Profit --- Purchasing power --- Supply-side economics --- Investments --- Investments: Stocks --- Macroeconomics --- Personal Income, Wealth, and Their Distributions --- Aggregate Factor Income Distribution --- Macroeconomics: Consumption --- Saving --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Investment & securities --- Disposable income --- Consumption --- Stocks --- National income --- United States