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Social Security in an Overlapping Generations Economy with Land

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Author Info
Ayse Imrohoroglu (University of Southern California)
Selahattin Imrohoroglu (University of Southern California)
Douglas H. Joines (University of Southern California)

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Abstract

We use balance sheet and National Income and Products Accounts (NIPA) data to calibrate factor shares in a model with three factors (land, labor, and capital) and three sectors (business, household, and government). These estimates are used in an overlapping generations model with land to study the long-run implications for social security. In this setup, dynamic inefficiency is theoretically ruled out due to the presence of land as a fixed factor of production. Our numerical experiments suggest that in this setup the partial insurance benefit provided by an unfunded social security system is outweighed by the reduction in aggregate long-run consumption that accompanies such a system. This negative finding for social security seems to be robust to different parameterizations of the model economy. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1006/redy.1999.0066
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Publisher Info
Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 2 (1999)
Issue (Month): 3 (July)
Pages: 638-665
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Handle: RePEc:red:issued:v:2:y:1999:i:3:p:638-665

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Find related papers by JEL classification:
E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models

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  1. Feldstein, Martin S, 1985. "The Optimal Level of Social Security Benefits," The Quarterly Journal of Economics, MIT Press, vol. 100(2), pages 303-20, May. [Downloadable!] (restricted)
    Other versions:
  2. Andrew B. Abel & N. Gregory Mankiw & Lawrence H. Summers & Richard J. Zeckhauser, 1989. "Assessing Dynamic Efficiency: Theory and Evidence," NBER Working Papers 2097, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Diaz-Gimenez, Javier & Prescott, Edward C. & Fitzgerald, Terry & Alvarez, Fernando, 1992. "Banking in computable general equilibrium economies," Journal of Economic Dynamics and Control, Elsevier, vol. 16(3-4), pages 533-559. [Downloadable!] (restricted)
    Other versions:
  4. Huggett, Mark, 1996. "Wealth distribution in life-cycle economies," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 469-494, December. [Downloadable!] (restricted)
  5. Ayse Imrohoroglu & Edward Prescott, 1991. "Seigniorage as a tax: a quantitative evaluation," Proceedings, Federal Reserve Bank of Cleveland, pages 462-482.
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  6. Bennett T. McCallum, 1988. "The Optimal Inflation Rate in an Overlapping-Generations Economy with Land," NBER Working Papers 1892, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. repec:cup:macdyn:v:1:y:1997:i:1:p:7-44 is not listed on IDEAS
  8. Imrohoroglu, Ayse & Imrohoroglu, Selahattin & Joines, Douglas H, 1995. "A Life Cycle Analysis of Social Security," Economic Theory, Springer, vol. 6(1), pages 83-114, June.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hans Fehr & Sabine Jokisch & Laurence J. Kotlikoff, 2005. "Will China Eat Our Lunch or Take Us to Dinner? – Simulating the Transition Paths of the U.S., EU, Japan, and China," Boston University - Department of Economics - Macroeconomics Working Papers Series WP2005-009, Boston University - Department of Economics. [Downloadable!]
    Other versions:
  2. Chung Tran & Juergen Jung, 2007. "The Extension of Social Security Coverage in Developing Countries," Caepr Working Papers 2007-026, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington. [Downloadable!]
  3. Ayse Imrohoroglu & Selahattin Imrohoroglu & Douglas H. Joines, 2000. "Time inconsistent preferences and Social Security," Discussion Paper / Institute for Empirical Macroeconomics 136, Federal Reserve Bank of Minneapolis. [Downloadable!]
    Other versions:
  4. Piero Gottardi & Felix Kubler, 2006. "Social Security and Risk Sharing," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  5. André Silva, 2008. "Taxes and labor supply: Portugal, Europe, and the United States," Portuguese Economic Journal, Springer, vol. 7(2), pages 101-124, August. [Downloadable!] (restricted)
  6. Sanchez-Romero, Miguel, 2006. "“Demand for Private Annuities and Social Security: Consequences to Individual Wealth”," Working Papers in Economic Theory 2006/07, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History). [Downloadable!]
  7. Alexander Ludwig & Dirk Krüger, 2006. "On the Consequences of Demographic Change for Rates of Returns to Capital, and the Distribution of Wealth and Welfare," MEA discussion paper series 06103, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
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  8. Dominik Grafenhofer & Christian Jaag & Christian Keuschnigg & Mirela Keuschnigg, 2006. "Probabilistic Aging," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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  9. Laurence J. Kotlikoff, 2001. "Generational Policy," NBER Working Papers 8163, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
    • Kotlikoff, Laurence J., 2002. "Generational policy," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 27, pages 1873-1932 Elsevier. [Downloadable!] (restricted)
  10. Roman Arjona, . "Gradually Capitalizing the Spanish Retirement Pension System," Studies on the Spanish Economy 81, FEDEA. [Downloadable!]
  11. Hans Fehr & Sabine Jokisch & Laurence J. Kotlikoff, 2005. "Will China Eat Our Lunch or Take Us Out to Dinner? Simulating the Transition Paths of the U.S., EU, Japan, and China," NBER Working Papers 11668, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Elizabeth M. Caucutt & Selahattin Imrohoroglu & Krishna B. Kumar, 2000. "Does the progressivity of taxes matter for economic growth?," Discussion Paper / Institute for Empirical Macroeconomics 138, Federal Reserve Bank of Minneapolis. [Downloadable!]
  13. Sabine Jokisch & Laurence J. Kotlikoff, 2005. "Simulating the Dynamic Macroeconomic and Microeconomic Effects of the FairTax," NBER Working Papers 11858, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Chung Tran, 2008. "Transfers and Labor Market Behavior of the Elderly in Developing Countries: Theory and Evidence from Vietnam," Caepr Working Papers 2008-018, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington. [Downloadable!]
  15. Hans Fehr & Christian Habermann & Fabian Kindermann, 2008. "Social Security with Rational and Hyperbolic Consumers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 884-903, October. [Downloadable!] (restricted)
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  16. Luisa Fuster & Ayse Imrohoroglu & Selahattin Imrohoroglu, 2004. "Elimination of Social Security in a Dynastic Framework," Macroeconomics 0402008, EconWPA. [Downloadable!]
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  17. Roman Arjona, . "Optimal Social Security Taxation in Spain," Studies on the Spanish Economy 80, FEDEA. [Downloadable!]
  18. Elizabeth M. Caucutt & Selahattin Imrohoroglu & Krishna B. Kumar, 2003. "Growth and Welfare Analysis of Tax Progressivity in a Heterogeneous-Agent Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(3), pages 546-577, July. [Downloadable!] (restricted)
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