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Social Security Financial Crises

Author

Listed:
  • Rodrigo Cerda

    () (Instituto de Economía. Pontificia Universidad Católica de Chile.)

Abstract

This paper explores the causes of the social security financial crises. We indicate that the financial crisis might be endogenous to the social security system. The main idea is that the PAYG social security system might affect fertility and human capital's decisions and therefore, may negatively impact the aggregated growth rate of the economy. These effects lead to an endogenous erosion of the financial basis of the PAYG social security program so that, as a consequence, the PAYG system is not sustainable and it requires continuous increases in the social security tax rate.

Suggested Citation

  • Rodrigo Cerda, 2003. "Social Security Financial Crises," Documentos de Trabajo 252, Instituto de Economia. Pontificia Universidad Católica de Chile..
  • Handle: RePEc:ioe:doctra:252
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    File URL: http://www.economia.uc.cl/docs/dt_252.pdf
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    References listed on IDEAS

    as
    1. Sjaastad, Larry A., 1998. "On exchange rates, nominal and real," Journal of International Money and Finance, Elsevier, vol. 17(3), pages 407-439, June.
    2. T. W.Swan, 1960. "Economic Control In A Dependent Economy," The Economic Record, The Economic Society of Australia, vol. 36(73), pages 51-66, March.
    3. Ángel Cabrera & Luis Felipe Lagos, 2002. "Monetary Policy in Chile: A Black Box?," Central Banking, Analysis, and Economic Policies Book Series,in: Norman Loayza & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series (ed.), Monetary Policy: Rules and Transmission Mechanisms, edition 1, volume 4, chapter 8, pages 197-246 Central Bank of Chile.
    4. Larry A Sjaastad, 1996. "Recent Evolution of the Chilean Real Exchange Rate," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 33(98), pages 109-132.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Pay-as-you-go social security; demographic transition; financial crisis;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J1 - Labor and Demographic Economics - - Demographic Economics

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