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Designing an Optimal Public Pension System

Author

Listed:
  • Fujii, Takao
  • Hayashi, Fumiaki
  • Iritani, Jun
  • Oguro, Kazumasa

Abstract

This paper uses a two-period overlapping generations model in order to provide a theoretical design for an optimal public pension system based on a partial equilibrium analysis. Household preferences only depend on two periods consumption and leisure and is homogeneous of degree m with respect to consumption in the working and retired periods. We present characteristic features of an optimal public pension system in this paper. First, differences in the population growth rate do not affect the relative level of the optimal net lifetime burden rate of each generation. Second, if m≠0 or m

Suggested Citation

  • Fujii, Takao & Hayashi, Fumiaki & Iritani, Jun & Oguro, Kazumasa, 2013. "Designing an Optimal Public Pension System," CIS Discussion paper series 578, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:cisdps:578
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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/25410/1/DP578.pdf
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    References listed on IDEAS

    as
    1. Charles Yuji Horioka, 2002. "Are the Japanese Selfish, Altruistic or Dynastic?," The Japanese Economic Review, Japanese Economic Association, vol. 53(1), pages 26-54.
    2. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    3. Martin Feldstein, 1995. "Would Privatizing Social Security Raise Economic Welfare?," NBER Working Papers 5281, National Bureau of Economic Research, Inc.
    4. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467-467.
    5. Judd, Kenneth L., 1999. "Optimal taxation and spending in general competitive growth models," Journal of Public Economics, Elsevier, vol. 71(1), pages 1-26, January.
    6. Bohn, Henning, 1990. "Tax Smoothing with Financial Instruments," American Economic Review, American Economic Association, vol. 80(5), pages 1217-1230, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Overlapping generations model; public pension; optimal burden rate;

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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