Privatizing Social Security
This paper studies the political sustainability of the existing pay-as-you-go social security system in the face of recent demographic patterns. We analyze different approaches to privatizing the system and consider what it would require for them to be politically implementable. The analysis is based on an overlapping generations economy where an initial generation would choose to implement a pay-as-you-go social insurance system. We study the sustainability of this system in each subsequent period. We describe some transitions policies that make the current generations of agents at least as well off as the maintenance of the social security system. All feasible transition policies use debt to finance the benefits during the transition period shifting at least some of the cost to unborn generations. (Copyright: Elsevier)
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Volume (Year): 2 (1999)
Issue (Month): 3 (July)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Thomas F. Cooley & Jorge Soares, 1999. "A Positive Theory of Social Security Based on Reputation," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 135-160, February.
- Lars Peter Hansen & Thomas J. Sargent, 1990.
"Recursive Linear Models of Dynamic Economies,"
NBER Working Papers
3479, National Bureau of Economic Research, Inc.
- David Altig & Jagadeesh Gokhale, 1997. "Social Security privatization: a simple proposal," Working Paper 9703, Federal Reserve Bank of Cleveland.
- TallariniJr., Thomas D., 2000.
"Risk-sensitive real business cycles,"
Journal of Monetary Economics,
Elsevier, vol. 45(3), pages 507-532, June.
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