Katherine Carman

RAND Corporation
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NBER Working Papers and Publications

November 2003The Impact on Consumption and Saving of Current and Future Fiscal Policies
with Jagadeesh Gokhale, Laurence J. Kotlikoff: w10085
This paper uses ESPlannerTM -- a life-cycle, financial planning model -- to investigate the potential impact of alternative fiscal policies on current consumption and saving. Studies to date have examined the response of current consumption to tax-induced temporary and permanent income changes. To our knowledge however, no study has directly examined whether consumption smoothing is actually feasible. ESPlanner's saving and life insurance recommendations generate the smoothest possible survival-state contingent lifetime consumption path for the household without putting it into debt. Such consumption smoothing is predicted by economic theory and appears to accord closely, on average, with actual behavior. By running households through ESPlanner based on current policy as well as on alte...
October 2001The Mismatch Between Life Insurance Holdings and Financial Vulnerabilities: Evidence from the Survey of Consumer Finances
with B. Douglas Bernheim, Jagadeesh Gokhale, Laurence J. Kotlikoff: w8544
Using the 1995 Survey of Consumer Finances and an elaborate life-cycle model, we quantify the potential financial impact of each individual's death on his or her survivors, and we measure the degree to which life insurance moderates these consequences. Life insurance is essentially uncorrelated with financial vulnerability at every stage of the life cycle. As a result, the impact of insurance among at-risk households is modest, and substantial uninsured vulnerabilities are widespread, particularly among younger couples. Roughly two-thirds of poverty among surviving women and more than one-third of poverty among surviving men results from a failure to insure survivors against an undiminished living standard. We also identify a systematic gender bias: for any given level of financial vuln...

Published: Bernheim, B. Douglas, Katherine Grace Carman, Jagadeesh Gokhale and Laurence J. Kotlikoff. "Are Life Insurance Holdings Related To Financial Vulnerabilities?," Economic Inquiry, 2003, v41(4,Oct), 531-554.

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