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International Welfare Spillovers of National Pension Schemes

Author

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  • Staveley-O’Carroll James

    (Economics Division, Babson College, Westgate Hall, 231 Forest Street, Babson Park, MA 02457 USA)

  • Staveley-O’Carroll Olena M.

    (Department of Economics and Accounting, College of the Holy Cross , One College Street, Worcester, MA 01610, USA)

Abstract

We employ a two-country overlapping-generations model to explore the international dimension of household portfolio choices induced by the asymmetric provision of government-run pensions. We study the resulting patterns of risk-sharing and the corresponding welfare effects on both home and foreign agents. Introducing the defined benefits pay-as-you-go system at home increases the welfare of all other agents at the expense of the home workers and improves the degree of intergenerational risk sharing abroad. Conversely, a defined contributions system leads to welfare losses of both home cohorts accompanied by gains abroad, but does increase the extent of intergenerational risk sharing at home.

Suggested Citation

  • Staveley-O’Carroll James & Staveley-O’Carroll Olena M., 2021. "International Welfare Spillovers of National Pension Schemes," The B.E. Journal of Macroeconomics, De Gruyter, vol. 21(1), pages 363-397, January.
    • Handle: RePEc:bpj:bejmac:v:21:y:2021:i:1:p:363-397:n:5
    DOI: 10.1515/bejm-2019-0207
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    More about this item

    Keywords

    welfare; pay-as-you-go system; international portfolio choice; OLG model;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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