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14:00 | Special Event
Visiting Master´s Scheme Presentation
CERGE-EI in cooperation with IES invites you to the Visiting Master’s Scheme presentation. You will meet current Visiting Master`s Scheme student as well as PhD program representative.
Date: Wednesday, 19 April 19, 2017
Time: 2 pm
Location: Institute of Economic Studies FSV UK, Opletalova 26, 110 00, Praha 1, room 314.
The Visiting Master´s Scheme, run jointly by CERGE-EI and IES, is primarily designed for academically motivated master’s students who are considering studying for a PhD in Economics and pursuing careers in the global academic sector or in international organizations. It is open to students enrolled in the Master's program Ekonomie a finance or Master in Economics and Finance at IES.
As a Visiting Master´s Scheme participant, you spend one year of your MA studies at CERGE-EI taking first year courses (which are automatically recognized by IES). After completing your second year MA studies at IES, you may apply to the PhD program at CERGE-EI and transfer directly into the second year of the doctorate program.
For more information about the scheme please see web page and Visiting Master´s Scheme leaflet.
If you have any questions, feel free to contact us at
16:30 | Macro Research Seminar
William Peterman, Ph.D. (Fed) “Optimal Public Debt with Life Cycle Motives”
Authors: William B. Peterman and Eric Sager
Abstract: In a seminal paper, Aiyagari and McGrattan (1998) find that in a standard incomplete markets model with infinitely lived agents it is optimal for the U.S. government to have a large amount of public debt. Debt is optimal because it induces a higher interest rate, which encourages more household savings and better self-insurance. This paper revisits their result in a life cycle model only to find that public debt’s insurance enhancing mechanism is severely limited. While a higher interest rate encourages higher average savings in both models, the benefits vary. In a life cycle model, agents enter the economy with no savings but must accumulate the higher level of savings throughout their lifetime, thereby eliminating some of the benefits. In contrast, infinitely lived agents do not accumulate savings over a lifetime and, thus, simply enjoy the benefit of the higher average savings ex ante. Overall, we find that while optimal debt is equal to 24% of output in the infinitely lived agent model, when a life cycle is introduced it is optimal for the government to hold savings equal to 59% of output. Not accounting for life cycle features when computing optimal policy reduces welfare by nearly one-half percent of expected lifetime consumption.
Keywords: Government Debt; Life Cycle; Heterogeneous Agents; Incomplete Markets
JEL Codes: H6, E21, E6
