Macroeconomic implications of switching the social security trust fund towards a greater investment in equities
AbstractThis paper shows that shifting the portfolio allocation of the social security trust fund towards more equity investment, ceteris paribus,reduces the aggregate capital stock asw ell asthe average consumption level of all individuals except the poor retirees who receive an increase but at the cost of a large increase in uncertainty. If a larger capital stock is desired, reducing the supply of publicly supplied goods is the most effective tool. That change also increases the average private consumption of all the young and the wealthy retirees although it does reduce the average consumption and uncertainty of the old non-savers.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2000035.
Date of creation: 00 Jul 2000
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