EconPapers    
Economics at your fingertips  
 

The effects of trust fund surpluses on the rest of the federal budget

Liqun Liu, Andrew J. Rettenmaier, Thomas R. Saving and Zijun Wang

The Quarterly Review of Economics and Finance, 2017, vol. 64, issue C, 228-237

Abstract: We constructed two theoretical models both of which predict that the federal fund surplus decreases, by an amount less than dollar-for-dollar, in response to an increase in the trust fund surplus. While this prediction is consistent with the empirical estimates based on the cross-sectional country-level data, it is at odds with the estimates based on the U.S. time series data. The paper then extends the existing time series analyses by considering a length-of-lag dimension in differencing the variables. By choosing alternative lengths of lag in differencing or not differencing at all, we not only are able to reproduce the range of existing time series estimates, but also generate estimates that are in line with the theoretical prediction and are consistent with those obtained from the cross-sectional country-level data. Our preferred model specification yields that only about one-third of the surplus generated in trust funds gets saved by the government.

Keywords: Social Security; Trust funds; Budget decision; Budget deficit; Public savings (search for similar items in EconPapers)
JEL-codes: D72 H55 H62 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062976916300813
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:quaeco:v:64:y:2017:i:c:p:228-237

Access Statistics for this article

The Quarterly Review of Economics and Finance is currently edited by R. J. Arnould and J. E. Finnerty

More articles in The Quarterly Review of Economics and Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2018-09-20
Handle: RePEc:eee:quaeco:v:64:y:2017:i:c:p:228-237