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Retirement in an overlapping generations model

Author

Listed:
  • Leon BETTENDORF

    (Netherlands Bureau for Economic Policy analysis, Den Haag)

  • Guido PEPERMANS

    (School of Economics, Sint-Aloysius, Brussels and Center for Economic Studies, University of Leuven)

Abstract

With an overlapping generations model, Williamson and Jones [1983] demonstrated that the long-run savings ratio in the U.S. was not affected by the introduction and the reform of the unfunded social security system. This paper extends their model by including a production sector, endogenous labour supply and a wage profile. Simulations show that incorporating general equilibrium and (exogenous) leisure is sufficient to generate a declining savings ratio in the steady state. Reforms of the social security system are evaluated in welfare terms. The new features of the model may significantly change the sign and the magnitude of the welfare gains for a steady state generations.

Suggested Citation

  • Leon BETTENDORF & Guido PEPERMANS, 1997. "Retirement in an overlapping generations model," Discussion Papers (REL - Recherches Economiques de Louvain) 1997042, Universit√© catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvre:1997042
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    File URL: http://sites.uclouvain.be/econ/DP/REL/1997042.pdf
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    References listed on IDEAS

    as
    1. Alberto F. Alesina & Roberto Perotti, 1999. "Budget Deficits and Budget Institutions," NBER Chapters,in: Fiscal Institutions and Fiscal Performance, pages 13-36 National Bureau of Economic Research, Inc.
    2. Willi Leibfritz & Deborah Roseveare & Paul van den Noord, 1994. "Fiscal Policy, Government Debt and Economic Performance," OECD Economics Department Working Papers 144, OECD Publishing.
    3. Alesina, Alberto & Perotti, Roberto, 1996. "Fiscal Discipline and the Budget Process," American Economic Review, American Economic Association, pages 401-407.
    4. Canova, Fabio, 1998. "Detrending and business cycle facts," Journal of Monetary Economics, Elsevier, pages 475-512.
    5. Domenico Fanizza & Vito Tanzi, 1995. "Fiscal Deficit and Public Debt in Industrial Countries, 1970-1994," IMF Working Papers 95/49, International Monetary Fund.
    6. Olivier Jean Blanchard, 1990. "Suggestions for a New Set of Fiscal Indicators," OECD Economics Department Working Papers 79, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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