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on Financial Literacy and Education |
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Issue of 2024–12–02
two papers chosen by Viviana Di Giovinazzo, Università degli Studi di Milano-Bicocca |
| By: | Christian de Boissieu |
| Abstract: | Face à l’essor des cryptomonnaies, les banques centrales sont en train de réagir en lançant leurs propres monnaies numériques. L’objet de ce Policy Brief est de faire le point sur la préparation des monnaies numériques de banques centrales (MNBC) par les autorités monétaires, un processus qui concerne tous les pays, émergents, en développement, et plus avancés. Il s’agit aussi d’analyser les conditions et certaines des conséquences (pour les banques, pour l’inclusion financière, pour la conduite de la politique monétaire...) d’une telle innovation financière, en distinguant systématiquement les MNBC de gros et les MNBC de détail. |
| Date: | 2023–04 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pb_19_23 |
| By: | Wenyuan Li; Pengyu Wei |
| Abstract: | This paper investigates the optimal consumption, investment, and life insurance/annuity decisions for a family in an inflationary economy under money illusion. The family can invest in a financial market that consists of nominal bonds, inflation-linked bonds, and a stock index. The breadwinner can also purchase life insurance or annuities that are available continuously. The family's objective is to maximize the expected utility of a mixture of nominal and real consumption, as they partially overlook inflation and tend to think in terms of nominal rather than real monetary values. We formulate this life-cycle problem as a random horizon utility maximization problem and derive the optimal strategy. We calibrate our model to the U.S. data and demonstrate that money illusion increases life insurance demand for young adults and reduces annuity demand for retirees. Our findings indicate that the money illusion contributes to the annuity puzzle and highlights the role of financial literacy in an inflationary environment. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.20128 |