On the Influence of Pay-As-You-Go Financed Pension Systems on Saving: The Role of Stability

Klaus Jaeger

Scottish Journal of Political Economy, 1994, vol. 41, issue 4, 358-71

Abstract: Based on a traditional overlapping generations model without intergenerational altruism and with an exogenously given labor supply, it is shown that, contrary to opposite claims in the literature, neither the short-run nor the long-run effects of an increase in the contributions to a pay-as-you-go old-age security system on the aggregate saving ratio are unambiguously negative. Depending on the nature of the respective equilibria (Marshallian, Walrasian, with or without oscillations) the short-run and the long-run effect may be positive or negative. Exact conditions are specified under which these different effects occur. Copyright 1994 by Scottish Economic Society.

Date: 1994
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Scottish Journal of Political Economy is currently edited by Tim Barmby, Andrew Hughes-Hallett and Campbell Leith

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