Social security policy with public debt in an aging economy |
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Authors: | Tetsuo Ono |
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Institution: | (1) Institute of Policy and Planning Sciences, University of Tsukuba, 1-1-1, Tennoudai, Tsukuba, Ibaraki 305-8573, Japan (Fax: +81-29-853-5070; e-mail: ono@sk.tsukuba.ac.jp), JP |
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Abstract: | This paper analyzes a social security policy with public debt in an overlapping generations growth model. In particular,
the paper considers a situation in which population aging causes a heavy burden of social security payments where public debt
is issued by the government to finance the payment. In the model presented below, an economy with an aging population may
achieve two dynamically inefficient equilibria. Under certain conditions, the effects of pension reform and population aging
on capital accumulation are entirely different between the two equilibria.
Received: 23 July 2001/Accepted: 22 August 2002
I am deeply grateful to an anonymous referee and Professor A. Cigno, the Editor of this journal, for their valuable comments
and suggestions. I am also grateful to Kazuyo Tanimoto and Kiheiji Nishida for their research assistance. Any remaining errors
are my own. The research reported here was conducted as part of a larger study, the “Project on Intergenerational Equity”
at the Institute of Economic Research, Hitotsubashi University. Financial support from Kani Hoken Bunka Zaidan is also gratefully
acknowledged. Responsible editor: Alessandro Cigno. |
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Keywords: | JEL classification: D91 E62 H55 H63 |
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