This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Securitization of taxes implicit in PAYG pensions

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Salvador Valdés-Prieto

Additional information is available for the following registered author(s):

Abstract

"To preserve solvency, a pay-as-you-go (PAYG) pension system needs to adjust contribution rates and pension promises over time. Currently, it is not possible to hedge in the financial market against politically determined uncertainty as regards these parameters. I consider a policy reform whereby property rights are established on the implicit lifetime tax levied by PAYG finance, and are assigned to the pension institution. These property rights are well defined if the reform also features rule-based allocation of aggregate risk, in the form of defined-contribution or defined-benefit schemes. I show that a PAYG pension system may indeed be instantly restructured so as to minimize political risk and allow financial-market diversification of risk. A side benefit is securitization of human-capital flows, which are not traded in existing financial markets. The new securities, if traded in appropriately competitive financial markets, are complementary to the Notional Account reforms of the 1990s. However, fiscal instability can increase if securitization is implemented in the absence of initial solvency and credible adoption of rule-based methods to allocate aggregate risk." Copyright © CEPR, CES, MSH, 2005.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0327.2005.00138.x
File Format: text/html
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Article provided by CEPR, CES, MSH in its journal Economic Policy.

Volume (Year): 20 (2005)
Issue (Month): 42 (04)
Pages: 215-265
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:bla:ecpoli:v:20:y:2005:i:42:p:215-265

Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0266-4658

Order Information:
Web: http://www.blackwellpublishing.com/subs.asp?ref=0266-4658

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords:

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Olivia S. Mitchell & John Piggott & Michael Sherris & Shaun Yow, 2006. "Financial Innovation for an Aging World," NBER Working Papers 12444, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
Statistics
Access and download statistics

Did you know? Use the JEL tree to browse through the database by subfields.

This page was last updated on 2009-11-22.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.