How Would Investing in Equities Have Affected the Social Security Trust Fund?

Gary Burtless, Anqi Chen, Wenliang Hou, Alicia Munnell and Anthony Webb ()

Working Papers, Center for Retirement Research at Boston College from Center for Retirement Research

Abstract: Some observers believe that investing a portion of the Social Security Trust Fund in equities would strengthen its finances and improve the program’s intergenerational risk-sharing. However, equity investments would also expose the program to greater financial risk and potentially greater political risk. Monte-Carlo simulation methods are used to investigate whether equity investments would likely strengthen the long-term outlook of the Trust Fund relative to the current policy of investing 100 percent of reserves in U.S. government bonds. The issues surrounding equity investments also go beyond expected returns on the Trust Fund portfolio. Concerns of government interference with the allocation of capital in the economy and with corporate decision-making as well as the accounting treatment of equity investments are also discussed.

Pages: 33 pages
Date: 2016-07
New Economics Papers: this item is included in nep-cmp
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://crr.bc.edu/working-papers/how-would-investi ... security-trust-fund/ R

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:crr:crrwps:wp2016-6

Access Statistics for this paper

More papers in Working Papers, Center for Retirement Research at Boston College from Center for Retirement Research Contact information at EDIRC.
Bibliographic data for series maintained by Amy Grzybowski () and Christopher F Baum ().