Short horizons, time inconsistency, and optimal social security

International Tax and Public Finance - Tập 16 - Trang 487-513 - 2009
T. Scott Findley1, Frank N. Caliendo1
1Department of Economics and Finance, Utah State University, Logan, USA

Tóm tắt

We study the optimal provision of social security in a dynamically efficient economy using a continuous-time overlapping-generations model in which consumers have short planning horizons. The short-horizon mechanism leads to dynamic optimization that is time-inconsistent over the life cycle. Our calibrated general-equilibrium results are generally supportive of social security for a wide array of social welfare functions. Thus, the basic life-cycle model can be augmented with only this slight twist in order to rationalize a social security program with the current U.S. tax rate.

Tài liệu tham khảo

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