Q2. What have the authors stated for future works in "A dynamic model of altruistically-motivated transfers" ?
Furthermore, the model has predictions on savings decisions that the authors plan to test in future versions of the paper. The authors also plan to assess the quantitative implications of their theory in computational examples. In future work, the authors plan to use their model as a building block for a dynamic theory on long-term-care decisions in order to evaluate different policy proposals.
Q3. How much money does the study give to a child?
Soldo & Hill (1995) find that in the Health and Retirement Study about 40% gave financial assistance to a child of at least $500.
Q4. What is the natural interpretation of the model?
While their model is capable of accomodating a variety of transfers, it is most naturally interpreted when considering transfers in terms of money.
Q5. What is the recent study on inter-vivos?
More recently Berry (2008), using the Health and Retirement Study, finds that inter-vivos financial assistance goes to the economically most disadvantaged children.
Q6. What is the simplest way to equalize the two margins?
To equalize the two margins, the following must hold:u′(ct) + ηα ′u′(c′t) = ηu ′(c′t) + αu ′(ct)]∀t,Plugging in yieldsu′(ct) = η + α1 + α′η u′(c′t) ∀t (10)This gives us c′t as a function of ct, and the authors can see that the problem has collapsed to a selfish savings problem with a different objective function; to see this, plug c′t into the objective (9).
Q7. What is the likely scenario for transfers?
The authors find that transfers are especially likely when the recipient is liquidityconstrained, which is in line with results from the empirical literature.
Q8. Why is the HJB simplification of the problem of a discrete time problem?
This is a considerable simplification of the problem, which does not arise in the analogous discretetime problem; it occurs because immediate strategic considerations turn out to be of second order.