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Capital Accumulation, Welfare, and the Emergence of Pension-Fund Activism

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  • Pascal Belan
  • Philippe Michel
  • Bertrand Wigniolle

Abstract

This paper presents an overlapping-generations model with altruistic consumers, in which pension funds, by holding a significant share of capital assets, produce noncompetitive behavior. We study the consequences of such behavior for capital accumulation and welfare in the long run when subsidies are associated with contributions to pension funds. If bequests are operative and the subsidy rate is not too high, the capital stock increases with the introduction of pension funds, and this increases long-run utility. If bequests are not operative without pension funds, the rise in long-run welfare is no longer guaranteed, even if the subsidy rate is low.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 63 (2007)
Issue (Month): 1 (March)
Pages: 54-82

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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200703)63:1_54:cawate_2.0.tx_2-v

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Related research

Keywords: imperfect competition; capital accumulation; pension funds; altruism;

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References

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  1. BELAN, P. & MICHEL, Ph. & WIGNIOLLE, B., 2001. "Pension funds and capital accumulation," CORE Discussion Papers 2001026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Burkart, Mike & Gromb, Denis & Panunzi, Fausto, 1997. "Large Shareholders, Monitoring, and the Value of the Firm," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 693-728, August.
  3. Mark G. Guzman, 1999. "Bank structure, capital accumulation and growth: a simple macroeconomic model," Working Papers 9907, Federal Reserve Bank of Dallas.
  4. Brunner, Johann K., 1993. "Transition from a pay-as-you-go to a fully-funded pension system: The case of differing individuals and intragenerational fairness," Discussion Papers, Series 1 266, University of Konstanz, Department of Economics.
  5. Breyer, Friedrich & Straub, Martin, 1991. "Welfare effects of unfunded pension systems when labor supply is endogenous," Discussion Papers, Series 1 252, University of Konstanz, Department of Economics.
  6. Steven Huddart, 1993. "The Effect of a Large Shareholder on Corporate Value," Management Science, INFORMS, vol. 39(11), pages 1407-1421, November.
  7. BELAN, Pascal & PESTIEAU, Pierre, . "Privatizing social security: A critical assessment," CORE Discussion Papers RP -1407, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
  9. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  10. Homburg, Stefan, 1990. "The Efficiency of Unfunded Pension Schemes," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 640-647.
  11. Belan, Pascal & Michel, Philippe & Wigniolle, Bertrand, 2003. "Les effets à long terme des fonds de pension," L'Actualité Economique, Société Canadienne de Science Economique, vol. 79(4), pages 457-480, Décembre.
  12. BELAN, Pascal & MICHEL, Philippe & PESTIEAU, Pierre, . "Pareto-improving social security reform," CORE Discussion Papers RP -1372, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Cetorelli, Nicola & Peretto, Pietro F., 2000. "Oligopoly Banking and Capital Accumulation," Working Papers 00-19, Duke University, Department of Economics.
  14. CODOGNATO, Giulio & GABSZEWICZ, Jean J., . "Cournot-Walras equilibria in markets with a continuum of traders," CORE Discussion Papers RP -1041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. Emmanuel Thibault, 2000. "Existence of equilibrium in an OLG model with production and altruistic preferences," Economic Theory, Springer, vol. 15(3), pages 709-715.
  16. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-88, June.
  17. repec:ebl:ecbull:v:4:y:2002:i:1:p:1-8 is not listed on IDEAS
  18. Brunner, Johann K., 1993. "Redistribution and the efficiency of the pay-as-you-go pension system," Discussion Papers, Series 1 265, University of Konstanz, Department of Economics.
  19. GABSZEWICZ, Jean & MICHEL, Philippe, 1992. "Oligopoly equilibria in exchange economies," CORE Discussion Papers 1992047, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  20. John Laitner, 1982. "Monopoly and Long-Run Capital Accumulation," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 143-157, Spring.
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Cited by:
  1. repec:hal:cesptp:halshs-00193985 is not listed on IDEAS
  2. repec:hal:journl:halshs-00268842 is not listed on IDEAS
  3. Belan, Pascal & Michel, Philippe & Wigniolle, Bertrand, 2005. "Does imperfect competition foster capital accumulation in a developing economy?," Research in Economics, Elsevier, vol. 59(2), pages 189-208, June.
  4. repec:hal:journl:halshs-00193985 is not listed on IDEAS

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