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Inefficiency in Social Security Trust Funds Forecasts

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  • Kajal Lahiri
  • Junyan Zhang
  • Yongchen Zhao

Abstract

We examine forecast accuracy and efficiency of the Social Security Administration’s projections for cost rate, trust fund balance, trust fund ratio made during 1980-2020 with horizons up to 95 years. We find that the reported deterioration in the accuracy of the forecasts during 2010’s has reversed. The level of informational inefficiency was pervasive during 1990-2009, although it shows signs of improvement after 2010.

Suggested Citation

  • Kajal Lahiri & Junyan Zhang & Yongchen Zhao, 2021. "Inefficiency in Social Security Trust Funds Forecasts," CESifo Working Paper Series 9415, CESifo.
    • Handle: RePEc:ces:ceswps:_9415
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    References listed on IDEAS

    as
    1. Kashin, Konstantin & King, Gary & Soneji, Samir, 2015. "Explaining Systematic Bias and Nontransparency in U.S. Social Security Administration Forecasts," Political Analysis, Cambridge University Press, vol. 23(3), pages 336-362, July.
    2. Ericsson, Neil R., 2017. "How biased are U.S. government forecasts of the federal debt?," International Journal of Forecasting, Elsevier, vol. 33(2), pages 543-559.
    3. Nordhaus, William D, 1987. "Forecasting Efficiency: Concepts and Applications," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 667-674, November.
    4. Konstantin Kashin & Gary King & Samir Soneji, 2015. "Systematic Bias and Nontransparency in US Social Security Administration Forecasts," Journal of Economic Perspectives, American Economic Association, vol. 29(2), pages 239-258, Spring.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    social security trust funds; long-range solvency forecasts; Nordhaus test; forecast efficiency; fixed-event forecast revisions;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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