On Paying-As-You-Go In An Explicit Overlapping Generations Model
In this application of an overlapping generations model the effects of a pay-as-you-go retirement scheme on the optimal savings rate, magnitude and stability of the equilibrium capital per capita level are established through the assumptions of explicit, well-behaved utility and production functions. The expected results regarding the partial effects of the population growth rate and discount rate on the optimal savings rate are obtained. In addition the optimal savings rate is seen to be inversely related to the proportion of wages collected as social security taxes. Under the assumed hypotheses a higher interest rate induces agents to save more. Existence of a positive equilibrium point is demonstrated and the partial effects of parameters are explored through numerical simulations. These results suggest an inverse relation between the magnitude of the equilibrium value and the population growth rate, tax rate and discount rate. The exponent of the Cobb-Douglas production function also has a negative effect on the equilibrium capital (per capita) level. The accumulation path can be written explicitly only in the backward dynamics form. On the basis of numerical calculations it is demonstrated that the relation between future and current capital values is one-to-one. Using the latter result it can be shown that the unique, positive equilibrium is in fact stable and the forward dynamics can be identified.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||05 Jul 2000|
|Date of revision:|
|Contact details of provider:|| Postal: CEF 2000, Departament d'Economia i Empresa, Universitat Pompeu Fabra, Ramon Trias Fargas, 25,27, 08005, Barcelona, Spain|
Fax: +34 93 542 17 46
Web page: http://enginy.upf.es/SCE/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:sce:scecf0:214. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.