Pensionomics pp 53-120 | Cite as

Tradable Human Capital

Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 572)


Human Capital Total Factor Productivity Physical Capital Market Portfolio Real Capital 
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  1. 3.
    Based on \( \mathbb{E}_{t - i} [\tilde \theta (t)] = \bar \theta \), also the mean of labor’s production elasticity is fixed at \( \mathbb{E}_{t - i} [\tilde \theta (t) - 1] = \bar \theta - 1 \). Furthermore, note that the assumption of Ã(t) > 0 excludes senseless negative total factor productivity. Finally, it is worth mentioning that this understanding of total factor productivity is based on Solow [1957], whereas Sect. 5.3 will address technical progress explicitly with a different implication for the corresponding variable.Google Scholar
  2. 16.
    However, recently inflation indexed bonds have come into vogue by international treasuries. While France or United States have already issued inflation indexed bonds, Germany is preparing the legal basis for doing so. With maturities of around 30 years these issuances present an obvious candidate for the riskless security in real terms. For further details on the importance of real versus nominal riskless returns see Campbell and Viceira [2001a].Google Scholar
  3. 21.
    Hence, log utility satisfies all consistency requirements concerning utility functions as explained for instance in Gollier [2001]. Furthermore, it prevents consumption approaching zero as utility derived from it becomes increasingly negative and is not defined for negative values of consumption.Google Scholar
  4. 22.
    See also Campbell and Viceira [2001a, p. 35] for this interpretation.Google Scholar
  5. 27.
    See for instance Ingersoll [1987, pp. 238–240].Google Scholar
  6. 35.
    In essence the result achieved by above two-step procedure could also be achieved by directly integrating across all agents of all generations and giving agents within a generation the same weights. Above remarks on the completeness would allow to follow Constantinides [1982, Lemma 1]. However, the stepwise aggregation is more intuitive.Google Scholar

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© Springer-Verlag Berlin Heidelberg 2006

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