IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v44y2016i5p589-609.html
   My bibliography  Save this article

Modeling and Estimating the Effects of Institutional Variables on a Pay-as-you-go Social Security System and on Household Saving

Author

Listed:
  • Dimitris Hatzinikolaou
  • Agathi Tsoka

Abstract

Using a two-period overlapping generations model and three panel data sets of annual aggregate data from twenty-five countries, we estimate a fixed-effects Euler equation for household saving. We focus on the effects of several institutional and other variables, such as corruption and the debt to gross domestic product (GDP) ratio, on household saving and on the probability that a pay-as-you-go social security system will grant pensions. We find that social security contributions reduce saving in a less than one-for-one manner. Also, as corruption or the debt to GDP ratio increases, the probability that the system will grant pensions falls, and so does the effect of social security contributions on saving. Finally, the marginal effect of an improvement in the quality of institutions on the credibility of the social security system is greater in countries where the quality of institutions is low than in countries where it is high, a result that stresses the role of institutions in reducing uncertainty about pensions.

Suggested Citation

  • Dimitris Hatzinikolaou & Agathi Tsoka, 2016. "Modeling and Estimating the Effects of Institutional Variables on a Pay-as-you-go Social Security System and on Household Saving," Public Finance Review, , vol. 44(5), pages 589-609, September.
  • Handle: RePEc:sae:pubfin:v:44:y:2016:i:5:p:589-609
    as

    Download full text from publisher

    File URL: http://pfr.sagepub.com/content/44/5/589.abstract
    Download Restriction: no

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:44:y:2016:i:5:p:589-609. 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: (SAGE Publications). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.