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Time-Inconsistent Preferences And Social Security

  • Ayse Imrohoroglu
  • Selahattin Imrohoroglu
  • Douglas H. Joines

In this paper we examine the role of social security in an economy populated by overlapping generations of individuals with time-inconsistent preferences who face mortality risk, individual income risk, and borrowing constraints. We find that unfunded social security lowers the capital stock, output, and consumption for consumers with time-consistent or time-inconsistent preferences. However, it may raise or lower welfare depending on the strength of time inconsistency. © 2001 the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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Article provided by MIT Press in its journal The Quarterly Journal of Economics.

Volume (Year): 118 (2003)
Issue (Month): 2 (May)
Pages: 745-784

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Handle: RePEc:tpr:qjecon:v:118:y:2003:i:2:p:745-784
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