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Social Security in an Overlapping Generations Economy with Land

Author

Listed:
  • Ayse Imrohoroglu

    (University of Southern California)

  • Selahattin Imrohoroglu

    (University of Southern California)

  • Douglas H. Joines

    (University of Southern California)

Abstract

We use balance sheet and National Income and Products Accounts (NIPA) data to calibrate factor shares in a model with three factors (land, labor, and capital) and three sectors (business, household, and government). These estimates are used in an overlapping generations model with land to study the long-run implications for social security. In this setup, dynamic inefficiency is theoretically ruled out due to the presence of land as a fixed factor of production. Our numerical experiments suggest that in this setup the partial insurance benefit provided by an unfunded social security system is outweighed by the reduction in aggregate long-run consumption that accompanies such a system. This negative finding for social security seems to be robust to different parameterizations of the model economy. (Copyright: Elsevier)

Suggested Citation

  • Ayse Imrohoroglu & Selahattin Imrohoroglu & Douglas H. Joines, 1999. "Social Security in an Overlapping Generations Economy with Land," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(3), pages 638-665, July.
  • Handle: RePEc:red:issued:v:2:y:1999:i:3:p:638-665
    DOI: 10.1006/redy.1999.0066
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    References listed on IDEAS

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    1. Mehra, Rajnish & Prescott, Edward C., 1985. "The equity premium: A puzzle," Journal of Monetary Economics, Elsevier, vol. 15(2), pages 145-161, March.
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    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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