Life annuities as a resource of public finance in Holland, 1648-1713. Demand- or supply-driven

This research empirically verifies adverse selection took place in Holland’s market for life annuities which made life annuities relatively costly for the government. As life annuities were the government’s preferred debt instrument and demand for them was slack the market was demand-driven. As long as no structural reform in the pricing mechanism was implemented the government would remain at the mercy of the market. Why said reform did not take place remains unclear.