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Consumer Behavior in the United States: Implications for Social Security Reform

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  • Evans, Paul

Abstract

This article shows theoretically and empirically that an aggregate Euler equation relates the growth rate of per capita consumption to the real interest rate, the ratio of private wealth plus asset income to consumption, and the ratio of social security wealth to consumption. Using the estimated Euler equation, the paper then calculates the steady-state effects of social security reform. Reforms that reduce the ratio of social security wealth to consumption are found to shift the balanced growth paths for the capital stock, output, and consumption upward appreciably. Copyright 2001 by Oxford University Press.

Suggested Citation

  • Evans, Paul, 2001. "Consumer Behavior in the United States: Implications for Social Security Reform," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 568-582, October.
  • Handle: RePEc:oup:ecinqu:v:39:y:2001:i:4:p:568-82
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    Cited by:

    1. Alfredo M. Pereira & Jorge M. Andraz, 2014. "On the Long-Term Macroeconomic Effects of Social Security Spending: Evidence for 12 EU Countries," CEFAGE-UE Working Papers 2014_08, University of Evora, CEFAGE-UE (Portugal).
    2. Alfredo Pereira & Jorge Andraz, 2012. "Social security and economic performance in Portugal: after all that has been said and done how much has actually changed?," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(2), pages 83-100, August.
    3. Muhammad Waqas & Masood Sarwar Awan, 2012. "Exchange Rate, Interest Rate and Ricardian Equivalence Evidence from Pakistan," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 0(SS), pages 249-269.

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