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Welfare state dynamics

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  • Alvaro Forteza

Abstract

The goal in the present paper is twofold, to shed some light on endogenous dynamic of the welfare states, and to provide a procedure to select among several equilibria. To this end, a dynamic model is presented, in which private agents are assumed to be "locked" to current decisions for a while. If "frictions" are large enough, the economy might exhibit more than one stable Paretorankable stationary state. Equilibrium paths would then be determined by history. The economy might become "stuck" at an inferior stationary state, with too much insurance and too little effort.

Suggested Citation

  • Alvaro Forteza, 1995. "Welfare state dynamics," Documentos de Trabajo (working papers) 0896, Department of Economics - dECON.
    • Handle: RePEc:ude:wpaper:0896
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    File URL: https://hdl.handle.net/20.500.12008/2299
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    References listed on IDEAS

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    1. Federico Echenique & Alvaro Forteza, 2000. "Are stabilization programs expansionary?," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 15(1), pages 65-89.
    2. Gustavo Bittencourt & Rosario Domingo, 1996. "Inversión Extranjera Directa en Uruguay: tendencias y determinantes," Documentos de Trabajo (working papers) 0696, Department of Economics - dECON.
    3. Adriana Cassoni, 1996. "A bargaining model with uncertainty and varying outside opportunities," Documentos de Trabajo (working papers) 1096, Department of Economics - dECON.
    4. Elvio Accinelli & Martín Puchet, 1996. "An application of the catastrophe theory in general equilibrium theory," Documentos de Trabajo (working papers) 0296, Department of Economics - dECON.
    5. Vaillant, Marcel, 1995. "El GATT 94 y la Organización Mundial del Comercio: una nueva agenda para Uruguay," Oficina de la CEPAL en Montevideo (Estudios e Investigaciones) 28754, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Alejandro Nin & María Inés Terra, 1996. "Mercosur: un camino a la apertura o la consolidación de un bloque cerrado?," Documentos de Trabajo (working papers) 0996, Department of Economics - dECON.
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