The macroeconomic effects of social security contributions and benefits

Sebastian Gechert, Christoph Paetz and Paloma Villanueva

Journal of Monetary Economics, 2021, vol. 117, issue C, 571-584

Abstract: A narrative dataset of legislative social security shocks is constructed for Germany. The dataset covers major legal changes in benefits and contributions from 1970 to 2018. We estimate their macroeconomic effects in a proxy SVAR. The GDP response to a cut in contributions yields a fiscal multiplier of about 0.4 on impact that fades relatively quickly. For benefit increases the impact multiplier is 1.1 and more persistent. The response of other macro variables suggests that benefits work through a strong demand-side channel, while contributions exhibit supply-side effects. Combining the shocks with household data confirms a strong consumption response of beneficiaries.

Keywords: Narrative approach; Fiscal multiplier; Social security; MPC Heterogeneity (search for similar items in EconPapers)
JEL-codes: E62 H20 H30 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304393220300416
Full text for ScienceDirect subscribers only

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:eee:moneco:v:117:y:2021:i:c:p:571-584

DOI: 10.1016/j.jmoneco.2020.03.012

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().