Suchergebnisse

The existing literature on precautionary saving is based almost entirely on the assumption that the household acts as if it consisted of a single individual decision-taker. In reality saving decisions are typically taken by two-person households. This paper examines the implications of this observation for the existence of precautionary saving, and shows that the assumption that the individual utility functions satisfy the conditions for precautionary saving to exist can imply that the household exhibits precautionary saving, but only under strong assumptions on the type of risk change being considered. (JEL D14, D81)

This paper analyses a recent proposal of the Australian Government to reform the existing Medicare system. It develops models of the physician's behaviour and of a household's demand for medical insurance under the proposed system, and then proceeds to characterise the equilibrium under the new proposals. It argues that those most likely to be made worse off are low income households with children, though a full evaluation of the effects of the proposal requires it to be analysed in a public finance framework.