Best Selling Books by Laurence J Kotlikoff

Written in a clear, accessible style, this shortened and simplified second edition provides a systematic way to interpret macroeconomic outcomes, to understand various policy proposals, and to appreciate how individuals and firms fit into the big picture.

In an effort to bring all generations to an understanding of the American economy, Laurence Kotlikoff shares information of the budget deficit of the United States government. Generational Accounting strives to educate readers on how the economy of the United States American functions, from explaining who pays for the goods and services the nation receives to when it must be paid, and just how much money goes to it. Kotlikoff analyzes how the government’s budget deficit is the cornerstone of conventional economic policy and argues that it is a number devoid of economic content, often used to lead the American people astray. “Read it and you’ll be on the cutting edge of future debates on fiscal policy.” – Fortune

How generational policy affects the sustainability of a government''s fiscal policy. In these eight 2002 Cairoli Lectures, presented at the Universidad Torcuato di Tella in Buenos Aires, Argentina, Laurence Kotlikoff shows how generational policy works, how it is measured, and how much it matters. Kotlikoff discusses the incidence and measurement of generational policy, the relationship of generational policy to monetary policy, and the vacuity of deficits, taxes, and transfer payments as economic measures of fiscal policy. Kotlikoff also illustrates generational policy''s general equilibrium effects with a dynamic life-cycle simulation model and reviews the empirical evidence testing intergenerational altruism and risk sharing. The lectures were delivered as Argentina faced a devastating depression triggered, in large part, by unsustainable generational policy. Throughout the book, Kotlikoff connects his messages about generational policy to the Argentine situation and the Argentine government''s policy mistakes.

Discover how the global financial plague is poised to return, and what can be done to stop it This is not your father''s financial system. Jimmy Stewart, the trustworthy, honest banker in the movie, It''s a Wonderful Life, is dead. And so is his small-town bank, Bailey Savings & Loan. Instead, we''re watching It''s a Horrible Mess with Wall Street (aka the Vegas Strip) playing ever larger craps with our economy and our tax dollars. This book, written by one of the world''s most respected economist, describes in lively, humorous, simple, but also deadly serious terms the big con underlying the big game?the web of interconnected financial, political, and regulatory malfeasance that culminated in financial meltdown and brought us to our economic knees. But it also proposes an amazingly simply solution?Limited Purpose Banking to make Wall Street safe for Main Street. This book, as well as the financial fix described within it, have received rave reviews from a veritable who''s who of policymakers and economics, plus five economics Nobel Laureates Written by a leading economist whose insights on this topic are unparalleled Outlines the first and only proposal to fundamentally fix our financial disaster for good Jimmy Stewart Is Dead will fundamentally change the way you think about the economy, financial markets, and the government.

This collection of essays, coauthored with other distinguished economists, offers new perspectives on saving, intergenerational economic ties, retirement planning, and the distribution of wealth. The book links life-cycle microeconomic behavior to important macroeconomic outcomes, including the roughly 50 percent postwar decline in America''s rate of saving and its increasing wealth inequality. The book traces these outcomes to the government''s five-decade-long policy of transferring, in the form of annuities, ever larger sums from young savers to old spenders. The book presents new theoretical and empirical analyses of altruism that rule out the possibility that private intergenerational transfers have offset those by the government.While rational life-cycle behavior can explain broad economic outcomes, the book also shows that a significant minority of households fail to make coherent life-cycle saving and insurance decisions. These mistakes are compounded by reliance on conventional financial planning tools, which the book compares with Economic Security Planner (ESPlanner), a new life-cycle financial planning software program. The application of ESPlanner to U.S. data indicates that most Americans approaching retirement age are saving at much lower rates than they should be, given potential major cuts in Social Security benefits.

A simple, straightforward, and foolproof proposal for universal health insurance from a noted economist. The shocking statistic is that forty-seven million Americans have no health insurance. When uninsured Americans go to the emergency room for treatment, however, they do receive care, and a bill. Many hospitals now require uninsured patients to put their treatment on a credit card which can saddle a low-income household with unpayably high balances that can lead to personal bankruptcy. Why don''t these people just buy health insurance? Because the cost of coverage that doesn''t come through an employer is more than many low- and middle-income households make in a year. Meanwhile, rising healthcare costs for employees are driving many businesses under. As for government-supplied health care, ever higher costs and added benefits (for example, Part D, Medicare''s new prescription drug coverage) make both Medicare and Medicaid impossible to sustain fiscally; benefits grow faster than the national per-capita income. It''s obvious the system is broken. What can we do? In The Healthcare Fix, economist Laurence Kotlikoff proposes a simple, straightforward approach to the problem that would create one system that works for everyone and secure America''s fiscal and economic future. Kotlikoff''s proposed Medical Security System is not the "socialized medicine" so feared by Republicans and libertarians; it''s a plan for universal health insurance. Because everyone would be insured, it''s also a plan for universal healthcare. Participants—including all who are currently uninsured, all Medicaid and Medicare recipients, and all with private or employer-supplied insurance—would receive annual vouchers for health insurance, the amount of which would be based on their current medical condition. Insurance companies would willingly accept people with health problems because their vouchers would be higher. And the government could control costs by establishing the values of the vouchers so that benefit growth no longer outstrips growth of the nation''s per capita income. It''s a "single-payer" plan, but a single payer for insurance. The American healthcare industry would remain competitive, innovative, strong, and private. Kotlikoff''s plan is strong medicine for America''s healthcare crisis, but brilliant in its simplicity. Its provisions can fit on a postcard and Kotlikoff provides one, ready to be copied and mailed to your representative in Congress.

This paper studies the macroeconomic and efficiency effects of privatizing social security. It does so by simulating alternative privatization schemes using the Auerbach-Kotlikoff Dynamic Life-Cycle Model. The simulations indicate three things. First, privatizing social security can generate very major long-run increases in output and living standards. Second the long-run gains from privatization are larger if privatization redistributes resources from initial to future generations, the pure efficiency gains from privatization are also substantial. Efficiency gains refers to the welfare improvement available to future generations after existing generations have been fully compensated for their losses from privatization. The precise size of the efficiency gain depends on the existing tax structure, the linkage between benefits and taxes under the existing social security system, and the method chosen to finance benefits during the transition. Third, at least in the long run, privatizing social security is likely to be progressive in that it improves the well-being of the lifetime poor relative to that of the lifetime rich.

The precautionary motive for saving is an important issue that is receiving increasing attention. Part of the motivation for this interest stems from the post war coincidence of two trends, one a decline in the U.S. rate of saving and the other an increase in insurance of various types, including unemployment insurance, annuity insurance, disability insurance, and health insurance. This paper examines precautionary saving for uncertain health care payments using a simple two period and illustrates this model''s theoretical insights through simulations of a 55 period life cycle model. While derived from a highly stylized model, the simulations give the impression that precautionary saving for uncertain health expenditures could explain a large amount of aggregate savings. Adding uncertain health expenditures to the model''s economy raises long run savings by almost one third, assuming individuals self insure. Arrangements for insuring uncertain health expenditures also have potentially quite sizable effects on savings. Introducing actuarially fair insurance to the economy with uncertain health expenditures reduces the steady state level of wealth of that economy by 12 percent. Switching from the fair insurance arrangement to a Medicaid-type program with an asset test further reduces steady state wealth by 75 percent.

Notwithstanding its widespread use as a measure of fiscal policy, the government deficit is not a well-defined concept from the perspective of neoclassical macro economics. From the neoclassical perspective the deficit is an arbitrary accounting construct whose value depends on how the government chooses to label its receipts and payments. This paper demonstrates the arbitrary nature of government deficits. The argument that the deficit is not well-defined is first framed in a simple certainty model with nondistortionary policies, and then in settings with uncertain policy, distortionary policy, and liquidity constraints. As an alternative to economically arbitrary deficits, the paper indicates that the "Fiscal Balance Rule" is one norm for measuring whether current policy will place a larger or smaller burden on future generations than it does on current generations. The Fiscal Balance Rule is based on the economy''s intertemporal budget constraint and appears to underlie actual attempts to run tight fiscal policy. It says take in net present value from each new young generation an amount equal to the flow of government consumption less interest on the difference between a) the value of the economy''s capital stock and b) the present value difference between the future consumption and future labor earnings of existing older generations. While the rule is a mouth-full, one can use existing data to check whether it is being obeyed and, therefore, whether future generations are likely to be treated better or worse than current generations

Perhaps no single statistic raises more concern about post War changes in the U.S. family than the proportion of the elderly living alone. Since 1940 the proportion of elderly living alone and in institutions has risen dramatically. While demographics appear to explain much of the change in the living arrangements of the elderly, the rising income of the elderly is viewed by many as the chief or at least a chief reason why the elderly live alone. The analyses underlying this view have not, however, considered the incomes and preferences of the children of the elderly. This paper presents a model of the joint living arrangement choice of parents and children. It then uses a new set of data to consider how the preferences and income positions of the elderly and their children influence the living arrangements of elderly parents. The findings suggest that the preferences and income levels of children may be important factors in explaining why so many of the elderly live alone.

This book examines a number of important determinants of wealth accumulation, including retirement bequests, and precautionary saving motives, demographics, the tax structure, social security, and insurance institutions.