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PAYG pensions and economic cycles: exogenous versus endogenous fertility

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  • Luciano Fanti
  • Luca Gori

Abstract

We analyse the dynamics of an overlapping generations economy with unfunded pay-as-you-go public pensions and myopic expectations by comparing exogenous and endogenous fertility contexts. It is shown that large PAYG pensions may cause endogenous fluctuations in both cases. However, ceteris paribus, when the number of children is an economic decision variable the economy is much more prone to cyclical instability and deterministic chaos emerges.

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Paper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2008/75.

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Date of creation: 01 Sep 2008
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Handle: RePEc:pie:dsedps:2008/75

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Keywords: Myopic foresight; PAYG pension; Stability; OLG model;

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Cited by:
  1. Manuela Gussoni - Andrea Mangani, 2009. "The impact of public funding for innovation on firms' R&D investments: Do R&D cooperation and appropriability matter?," Discussion Papers, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy 2009/90, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  2. Luca Gori, 2009. "Endogenous fertility, family policy and multiple equilibria," Discussion Papers, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy 2009/79, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

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