PWBM Faculty Director Kent Smetters and Director of Special Projects Jagadeesh Gokhale presented an overview of the PWBM integrated model and a new project on requirement adequacy at the Federal Reserve Bank of Philadelphia.

Abstract: We present an brief overview of the Penn Wharton Budget Model integrated microsimulation-OLG model that is being used to analyze a range of policies, including tax reform, public investment and social insurance programs. The model eliminates multiple biases in policymaking, allows for a deeper calibration of dynamic models, allows for cost-benefit analysis of large programs that produce macroeconomic consequences, and promotes a method of lifetime welfare-based distributional analysis than provides a more accurate picture of a policy’s winners and losers than standard distributional analysis. We then spend most of the time discussing a new project in the works--- estimating retirement adequacy---that is first to try to account for numerous sources of income during retirement, including familial and government transfers. The hope of the new project is that it will reconcile the common claim of inadequate retirement preparation by many U.S. households with the empirical fact that consumption in retirement does not appear to fall for low-wealth households in a way that is inconsistent with theory or even inconsistent with the fall in consumption by higher-wealth households entering retirement.