Dynamic OLG
The dynamic version of PWBM is based on an overlapping-generations (OLG) model where households maximize their welfare in a forward-looking manner, adjusting work and savings decisions based on wages and interest rates.
Key Features
- Numerous household types varying by income and demographics
- Household uncertainty about income and longevity
- Analysis of tax, Social Security, and immigration policy
- Support for unbalanced reforms affecting government debt
Default Model Parameters
| Parameter | Default Value |
|---|---|
| Labor responsiveness | 0.5 |
| Savings responsiveness | 0.5 |
| U.S. economy openness | 40 percent |