Macroeconomic implications of switching the social security trust fund towards a greater investment in equities
This paper shows that shifting the portfolio allocation of the social security trust fund towards more equity investment, ceteris paribus,reduces the aggregate capital stock asw ell asthe average consumption level of all individuals except the poor retirees who receive an increase but at the cost of a large increase in uncertainty. If a larger capital stock is desired, reducing the supply of publicly supplied goods is the most effective tool. That change also increases the average private consumption of all the young and the wealthy retirees although it does reduce the average consumption and uncertainty of the old non-savers.
|Date of creation:||00 Jul 2000|
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- Henry J. Aaron & John B. Shoven, 1999. "Should the United States Privatize Social Security?," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011743 edited by Benjamin M. Friedman, January.
- Michael Dotsey, 1997. "Investing in equities: can it help social security?," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 49-70.
- Pascal Belan & Pierre Pestieau, 1999.
"Privatizing Social Security: A Critical Assessment,"
The Geneva Papers on Risk and Insurance - Issues and Practice,
Palgrave Macmillan;The Geneva Association, vol. 24(1), pages 114-130, January.
- BELAN, Pascal & PESTIEAU, Pierre, "undated". "Privatizing social security: A critical assessment," CORE Discussion Papers RP 1407, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- BELAN, Pascal & PESTIEAU, Pierre, 1997. "Privatizing social security: a critical assessment," CORE Discussion Papers 1997084, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Martin Feldstein & Andrew Samwick, 1998. "The Transition Path in Privatizing Social Security," NBER Chapters,in: Privatizing Social Security, pages 215-264 National Bureau of Economic Research, Inc.
- Martin Feldstein & Andrew Samwick, 1996. "The Transition Path in Privatizing Social Security," NBER Working Papers 5761, National Bureau of Economic Research, Inc.
- Uri Possen & Steven Slutsky, 1980. "Public-Private Consumption Tradeoffs and the Balanced Budget Multiplier," The Quarterly Journal of Economics, Oxford University Press, vol. 95(4), pages 679-702.
- Narayana R. Kocherlakota, 1996. "The Equity Premium: It's Still a Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 42-71, March.
- Kocherlakota, N., 1995. "The Equity Premium: It's Still a Puzzle," Working Papers 95-05, University of Iowa, Department of Economics.
- Narayana R. Kocherlakota, 1995. "The equity premium: it's still a puzzle," Discussion Paper / Institute for Empirical Macroeconomics 102, Federal Reserve Bank of Minneapolis.
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