Matthias Kredler (Universidad Carlos III de Madrid)

The timing of transfers is critical to their value for recipients. Thus, although the bulk of family transfers occurs in the form of inheritances, inter-vivos trans- fers may be far more valuable than their size suggests. To uncover the economic importance of inter-vivos transfers to recipients, we propose a tractable lifecy- cle model of the family capable of reproducing salient features of the data. We then use the model to address the consumption insurance puzzle based on Blun- dell et al. (2008). The model has the potential to narrow the gap between actual consumption insurance in the data and that predicted by standard incomplete- markets models. The model may also provide a novel rationale for the preferen- tial tax treatment of inter-vivos transfers relative to bequests.