The paper analyzes how capital gains due to a reduction in the market discount rate affect life-cycle consumption choice. The analysis is done in a simple general equilibrium model with cohorts of workers and retirees all with constant relative risk aversion preferences. Simulation results show capital gains due to a fall in market discount rates make workers worse off with the exception of those with less than 7 years to retirement. The analysis has policy implication for the taxation of capital gains.
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