IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

The macroeconomic stabilisation effects of Social Security and 401(k) plans

  • Teresa Ghilarducci
  • Joelle Saad-Lessler
  • Eloy Fisher

This paper investigates how various retirement institutions impact the macroeconomy. We find that for every 1 percentage point increase in the output gap, net flows of various government programmes including Social Security decrease by 0.34 percentage points, while net flows of 401(k) plans increase by 0.05 percentage points. In levels, for every $1 increase in real gross domestic product, net flows from various government programmes shrink by 45 cents, whereas net flows from 401(k) plans increase by 4.6 cents. In other words, 401(k) plans reduce the automatic stabilisation impact of government programmes by 10%--15%. Moreover, we find that Social Security has a net negative effect on household consumption, while 401(k) retirement accounts work the opposite way. In fact the destabilising effect of 401(k) plans on consumption is twice as strong as the one attributed to Social Security.These results highlight a significant problem with 401(k) retirement plans and any retirement plan that is dependent on financial markets. Copyright The Author 2012. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Oxford University Press in its journal Cambridge Journal of Economics.

Volume (Year): 36 (2012)
Issue (Month): 1 ()
Pages: 237-251

in new window

Handle: RePEc:oup:cambje:v:36:y:2012:i:1:p:237-251
Contact details of provider: Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page:

Order Information: Web:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:oup:cambje:v:36:y:2012:i:1:p:237-251. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.