Joint Retirement of Couples: Evidence from a Natural Experiment

Jochem Zweerink (VU University Amsterdam)

We estimate and explain the impact of early retirement of husbands on the wives’ probability to retire within one year, using administrative micro panel data that cover the whole Dutch population. We employ an instrumental variable approach in which retirement choice of husbands is instrumented with eligibility rules for generous early retirement benefits that were temporarily and unexpectedly available. The empirical model explains wives’ probability to retire within one year. We find that early retirement opportunity of husbands increased the wives’ probability to retire within one year by 25.4 percentage points. This is a strong effect. Our results are robust to several sensitivity tests. Joint with Hans Bloemen en Stefan Hochguertel.

Field: labour economics

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Central Bank Financial Strength and Inflation: Where does It Matter?

Julien Pinter (University of Amsterdam)

The empirical literature about the issue of Central Bank Financial Strength (CBFS henceforth) is quite novel but already contains some contradictory results. While the previous studies mostly try to find whether or not CBFS matter for central banks as a whole, in this study we turn the question differently. We focus here on the potential relevancy of the link between CBFS and inflation for different subgroups of countries where theoretical reasons suggest the presence of a link. Hereby we try to find where central bank financial strength does really matter, a question we find more relevant. Our findings suggest that, while central bank financial strength as measured by our proxy is of very little – if no – importance for some countries, it can be an important determinant of inflation for some other countries, namely the ones with poor “taxable capacity”, de facto potentially highly subject to interferences between monetary and fiscal policies. This finding is consistent with the theoretical argument that CBFS is seen as a credibility tool for monetary policy, this credibility tool being especially relevant in countries in which the credibility of the central bank can potentially be impaired (or has effectively been impaired in the past) by fiscal dominance issues. The results also allow us to explain the contradictory results of the previous studies.

Field: Macroeconomics