On sustainable pay as you go systems

Gabrielle Demange

PSE Working Papers from HAL

Abstract: An unfunded Social Security system faces the major risk, sometimes referred to as "political risk", that future generations modify or even suppress the contributions. In order to account properly for this risk, the paper considers a political process in which the support to the system is asked from each new born generation. The analysis is conducted in an overlapping generations economy that is subject to macro-economic shocks. As a consequence, the political support varies with the evolution of the economy. The impact of various factors -intra-generational redistribution, risk aversion, financial markets, governmental debt- on the political sustainability of a pay-as-you-go system is discussed.

Keywords: pay-as-you-go; intra-generational redistribution; overlapping generations; social security system; political economy; risk (search for similar items in EconPapers)
Date: 2005-01
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00590859v1
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: On Sustainable Pay-As-You-Go Systems (2005)
Working Paper: On sustainable pay as you go systems (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:psewpa:halshs-00590859

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