On Financing Retirement with an Aging Population

Edward Prescott and Ellen McGrattan

No 61, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: A problem facing the United States is financing retirement consumption as its population ages. Policy analysts increasingly advocate savings-for-retirement systems, but are concerned with insufficient savings opportunities with limited government debt. This concern is unwarranted. First, there is more productive capital than commonly assumed in macroeconomic modeling. Second, if the policy reform subsumes the elimination of capital income taxes, then the value of business equity increases relative to the capital stock. Phasing in a switch from the current U.S. system to a savings-for-retirement system without capital income taxes increases welfare of all current and future cohorts.

Date: 2013
New Economics Papers: this item is included in nep-age, nep-dem and nep-dge
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Citations: View citations in EconPapers (21)

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Working Paper: On Financing Retirement with an Aging Population (2013)
Working Paper: On financing retirement with an aging population (2012)
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