A way out of pay-as-you-go without a double burden

Ulrich van Suntum

No 27, CAWM Discussion Papers from University of Münster, Münster Center for Economic Policy (MEP)

Abstract: It has repeatedly been proposed to reduce conventional pay-as-you-go-systems to a base level, leaving advanced retirement provision for private funded systems. However, pay-asyou-go systems are, in a sense, one way roads, with no available Pareto efficient way out. The paper discusses a combined public debt and taxing strategy which distributes the transition burden equally between future generations, leaving them with only moderate losses in terms of present value. It is shown within both a two generations model and a multiple-generations model of OLG type, that, with this strategy, there results only a temporary increase in public debt ratio, which even turns into a public surplus in the long run. The paper argues that such a transformation towards a base pension system would be both economically advisable and politically feasible.

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/51384/1/672444224.pdf (application/pdf)

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:zbw:cawmdp:27

Access Statistics for this paper

More papers in CAWM Discussion Papers from University of Münster, Münster Center for Economic Policy (MEP) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().