Social Security Investment in Equities
This paper explores the general-equilibrium impact of social security portfolio diversification into private securities, either through the trust fund or private accounts. The analysis depends critically on heterogeneities in saving, production, assets, and taxes. Limited diversification weakly increases interest rates, reduces the expected return on short-term investment (and the equity premium), decreases safe investment, increases risky investment, and increases a suitably weighted social welfare function. However, the effects on aggregate investment, long-term capital values, and the utility of young savers hinges on assumptions about technology. Aggregate investment and long-term asset values can move in opposite directions. (JEL H55)
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Volume (Year): 93 (2003)
Issue (Month): 4 (September)
Pages: 1047-1074
| Handle: | RePEc:aea:aecrev:v:93:y:2003:i:4:p:1047-1074 |
| Note: | DOI: 10.1257/000282803769206197 |
| Contact details of provider: | Web page: https://www.aeaweb.org/aer/Email: More information through EDIRC
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References listed on IDEAS
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.:
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