Christian Scharrer
The
Effects of Financing Rules in Pay-As-You-Go Pension Systems on the Life
and the Business Cycle
Abstract:
I
study the impacts of financing rules for financial surpluses in
pay-as-you-go pension systems on the business cycle and the life cycle
in a dynamic stochastic large-scale overlapping generations model,
where households take the inter-temporal links between contributions
and pension benefits explicitly into account. The results point out
that sluggish adjustments of contribution rates that are implemented by
adjusting a financial buffer stock both stabilize an economy and
decrease the volatility of life-time utilities of retirees and workers
close to retirement. Such a policy allows these households a better
hedge against macroeconomic shocks over the business cycle. Moreover, I
show that the impacts of higher fluctuations of aggregate variables on
the volatility of individual lifetime utilities can rather be
negligible.
JEL: H55, E21, E30
Paper:
Paper available as pdf-file.
Beitrag Nr. 340, Volkswirtschaftliche Diskussionsreihe, Institut
für
Volkswirtschaftslehre der Universität Augsburg
Contact:
Christian Scharrer, University of Augsburg, Department of
Economics,
D-86135
Augsburg,
Germany, phone +49-821-598-4314
email: christian.scharrer@wiwi.uni-augsburg.de
Bo.,
24.07.2020