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Social security and foreign indebtedness in a small open economy

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  • Søren Nielsen

Abstract

This paper investigates the consequences of changes in a small open economy's unfunded social security system for its net foreign asset position. We apply Blanchard's finite horizon framework and show how an increase in the social security system's benefit rate is likely to lead to foreign indebtedness, even when induced retirement is allowed for. Copyright Kluwer Academic Publishers 1994

Suggested Citation

  • Søren Nielsen, 1994. "Social security and foreign indebtedness in a small open economy," Open Economies Review, Springer, vol. 5(1), pages 47-63, March.
  • Handle: RePEc:kap:openec:v:5:y:1994:i:1:p:47-63 DOI: 10.1007/BF01000744
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    References listed on IDEAS

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    1. Alan J. Auerbach & Laurence J. Kotlikoff, 1981. "An Examination of Empirical Tests of Social Security and Savings," NBER Working Papers 0730, National Bureau of Economic Research, Inc.
    2. R. Glenn Hubbard & Kenneth L. Judd, 1986. "Liquidity Constraints, Fiscal Policy, and Consumption," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(1), pages 1-60.
    3. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
    4. Laurence J. Kotlikoff, 1979. "Social Security and Equilibrium Capital Intensity," The Quarterly Journal of Economics, Oxford University Press, vol. 93(2), pages 233-253.
    5. Hubbard, R Glenn & Judd, Kenneth L, 1987. "Social Security and Individual Welfare: Precautionary Saving, Borrowing Constraints, and the Payroll Tax," American Economic Review, American Economic Association, pages 630-646.
    6. Abel, Andrew B, 1985. "Precautionary Saving and Accidental Bequests," American Economic Review, American Economic Association, pages 777-791.
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    Citations

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    Cited by:

    1. Hougaard Jensen, Svend Erik & Nielsen, Søren Bo & Haagen Pedersen, Lars & Birch Sørensen, Peter, 1993. "Tax reform, welfare and intergenerational redistribution," Discussion Papers, Series II 211, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    2. Nickel, Christiane & Rother, Philipp & Theophilopoulou, Angeliki, 2008. "Population ageing and public pension reforms in a small open economy," Working Paper Series 863, European Central Bank.
    3. Hoon, Hian Teck & Phelps, Edmund S., 2008. "Future fiscal and budgetary shocks," Journal of Economic Theory, Elsevier, pages 499-518.
    4. William Scarth, 1999. "Alternatives for Raising Living Standards," Social and Economic Dimensions of an Aging Population Research Papers 5, McMaster University.
    5. William Scarth, 1999. "Alternatives for Raising Living Standards," Quantitative Studies in Economics and Population Research Reports 344, McMaster University.
    6. Leon Bettendorf & Ben Heijdra, 2005. "Population Ageing and Pension Reform in a Small Open Economy with Non-Traded Goods," Tinbergen Institute Discussion Papers 05-021/2, Tinbergen Institute.
    7. Malick Souare, 2003. "Macroeconomic Implications of Population Aging and Public Pensions," Social and Economic Dimensions of an Aging Population Research Papers 100, McMaster University.
    8. James Andreoni & Eleanor Brown & Isaac Rischall, 2003. "Charitable Giving by Married Couples Who Decides and Why Does it Matter?," Journal of Human Resources, University of Wisconsin Press.
    9. William Scarth, 2003. "Population Aging, Productivity, and Growth in Living Standards," Quantitative Studies in Economics and Population Research Reports 380, McMaster University.
    10. Bettendorf, Leon J.H. & Heijdra, Ben J., 2006. "Population ageing and pension reform in a small open economy with non-traded goods," Journal of Economic Dynamics and Control, Elsevier, vol. 30(12), pages 2389-2424, December.
    11. Jensen, Svend Erik Hougaard & Bo Nielsen, Soren & Pedersen, Lars Haagen & Sorensen, Peter Birch, 1996. "Tax policy, housing and the labour market: An intertemporal simulation approach," Economic Modelling, Elsevier, vol. 13(3), pages 355-382, July.
    12. William Scarth, 2003. "Population Aging, Productivity, and Growth in Living Standards," Social and Economic Dimensions of an Aging Population Research Papers 90, McMaster University.

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    Keywords

    social security; pensions; foreign indebtedness;

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