 SOCIAL SECURITY INVESTMENT POLICY AND CAPITAL FORMATIONContemporary Economic Policy, 1992, vol. 10, issue 3, 26-38 Abstract: Large recent surpluses in the social security trust fund accounts provide the potential to increase overall national saving and capital formation. However, these surpluses instead have allowed politicians to increase the non‐social security deficit and government consumption. This paper argues that investing the trust funds in private assets could bring into focus the magnitude of the non‐social security deficit and force Congress to cut it. Evidence presented here indicates that the trade deficit, output, and monetary policy are systematic macroeconomic variables that affect relative asset prices. The evidence also supports arguments of Nordhaus and others that a change in trust fund investment policy could lower the trade deficit, raise output, and produce looser monetary policy, thereby increasing Tobin's a and, thus, capital formation. Investing the trust funds in private assets could increase national investment and give the baby‐bust generation more capital to use in producing goods and services for themselves and for retired baby‐boomers. Date: 1992 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:coecpo:v:10:y:1992:i:3:p:26-38 Ordering information: This journal article can be ordered from Access Statistics for this article Contemporary Economic Policy is currently edited by Brad R. Humphreys More articles in Contemporary Economic Policy from Western Economic Association International Contact information at EDIRC. |
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