The Impact of Individual Investment Behavior for Retirement Welfare: Evidence from the United States and Germany



Tables

Table 1: Parameter Calibration for the Benchmark Model

Parameter

Value United

________States________

Value Germany

relative risk aversion

γ

2 (1, 3)

2 (1, 3)

subjective discount factor

δ

0.97 (0.95, 0.99)

0.97 (0.95, 0.99)

United States Life

Tables 2003

Life Table for

survival probability

pt

Germany
2002/2004

marginal tax rate
Log-normal stock return

Rt

0%

0%

expected return

E(Rt)

1.1151

1.1264

standard deviation of return

Std(Rt)

0.1996

0.2792

risk-free return

Rf

1.0361

1.0472

Inflation

π

0.0310

0.0279

Log-normal labor income

Lt

expected growth rates during

life-cycle-income

life-cycle-income

work life

profile

profile

expected real growth rates during
retirement

0

0

replacement factor

35%

40%

standard deviation during
work life

0.19 ∙ E(Lt)

0.05 ∙ E(Lt)

standard deviation during

retirement_____________________

0

0

42



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