Social Security and Trust Fund Management

Takashi Oshio

No 10444, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we investigate why and to what extent the government should have a social security trust fund, and how it should manage the fund in the face of demographic shocks, based on a simple overlapping-generations model. We show that, given an aging population, a trust fund in some form could achieve the (modified) golden rule or to offset the negative income effect of a PAYGO system. Besides, in a closed economy where factor-prices effects dominate, using the trust fund as a buffer for demographic shocks could lead to a widening of intergenerational inequality. We also the discuss policy implications of our analysis on the social security reform debate in Japan, including the fixed tax method and the use of the trust fund in the face of a rapidly aging population.

JEL-codes: H23 H55 (search for similar items in EconPapers)
Date: 2004-04
Note: AG PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Oshio, Takashi. "Social Security And Trust Fund Management," Journal of the Japanese and International Economies, 2004, v18(4,Dec), 528-550.

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