Investing U.S. Social Security Trust Fund Assets in Private Securities

Michael Leidy

No 1997/112, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the macroeconomic and distributional consequences of a policy change, other things being equal, that would allow U.S. Social Security trust fund assets to be invested in private securities. Improving the expected return to trust fund assets, by shifting these from government bonds to private securities, tends to reduce (increase) the future claim on national output of the current (future) working population. The effects on aggregate saving and future output depend on whether current workers interpret this policy change as affecting their future Social Security benefits.

Keywords: WP; trust fund; social security; social insurance; trust fund assets; initial-period tax increase; savings-adjustment effect; yield differential; foregone return; asset yield; return to equities; Securities; Extra-budgetary funds; Stocks; Private savings; Sovereign bonds (search for similar items in EconPapers)
Pages: 28
Date: 1997-09-01
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1997/112

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