scholarly journals Sharing High Growth across Generations: Pensions and Demographic Transition in China

2015 ◽  
Vol 7 (2) ◽  
pp. 1-39 ◽  
Author(s):  
Zheng Song ◽  
Kjetil Storesletten ◽  
Yikai Wang ◽  
Fabrizio Zilibotti
Keyword(s):  
Emerging Economies ◽  
Overlapping Generations ◽  
Current System ◽  
High Growth ◽  
Future Generations ◽  
Financial Sustainability ◽  
Welfare Gains ◽  
Overlapping Generations Model ◽  
Intergenerational Redistribution ◽  
Endogenous Labor

We analyze intergenerational redistribution in emerging economies with the aid of an overlapping generations model with endogenous labor supply. Growth is initially high but declines over time. A version of the model calibrated to China is used to analyze the welfare effects of alternative pension reforms. Although a reform of the current system is necessary to achieve financial sustainability, delaying its implementation implies large welfare gains for the (poorer) current generations, imposing only small costs on (richer) future generations. In contrast, a fully funded reform harms current generations, with small gains to future generations. (JEL E13, H55, J11, O11, O15, P24, P36)

scholarly journals Fiscal Consolidation: Welfare Effects of the Adjustment Speed

2020 ◽  
pp. 39-67
Author(s):  
Miguel Fonseca
Keyword(s):  
Incomplete Markets ◽  
Overlapping Generations ◽  
German Economy ◽  
Welfare Effects ◽  
Fiscal Consolidation ◽  
Welfare Gains ◽  
Overlapping Generations Model ◽  
Distribution Of Wealth ◽  
Adjustment Speed ◽  
Fiscal Consolidations

This article studies the response of social welfare to fiscal consolidations, by focusing on a less debated characteristic of fiscal plans: the speed of deleveraging. A neoclassical overlapping generations model is calibrated to the German economy, and a sequence of reductions of the same size in the debt‑ to GDP ratio are simulated considering different adjustment periods. Welfare gains are found to be larger in slow, delayed fiscal consolidations, due to the presence of incomplete markets. It is also found that the aggregate welfare response depends on the distribution of wealth and the type of fiscal instrument used.

scholarly journals The Political Economy of Municipal Pension Funding

2018 ◽  
Vol 10 (3) ◽  
pp. 215-246 ◽  
Author(s):  
Jeffrey Brinkman ◽  
Daniele Coen-Pirani ◽  
Holger Sieg
Keyword(s):  
Overlapping Generations ◽  
Land Market ◽  
Evidence Based ◽  
Overlapping Generations Model ◽  
Retirement Benefits ◽  
Pension Funding ◽  
Land Prices ◽  
Intergenerational Redistribution ◽  
Public Sector Employees ◽  
Pension Liabilities

Many US municipalities have committed to pay retirement benefits to public sector employees but have not saved enough to fulfill these obligations. This paper studies the determinants of municipal pension funding and its implications for intergenerational redistribution using an overlapping generations model. Under perfect capital markets, pension funding choices are fully capitalized into land prices. This neutrality result fails if agents face a binding downpayment constraint in the land market: old agents prefer a pay-as-you go system, while young agents find a fully funded system optimal. Empirical evidence based on cross-city comparisons of pension liabilities is consistent with these predictions. (JEL H72, H75, J32, J45)

scholarly journals LONGEVITY, GROWTH, AND INTERGENERATIONAL EQUITY: THE DETERMINISTIC CASE

2015 ◽  
Vol 20 (4) ◽  
pp. 985-1021 ◽  
Author(s):  
Torben M. Andersen ◽  
Marias H. Gestsson
Keyword(s):  
Overlapping Generations ◽  
Well Being ◽  
Intergenerational Equity ◽  
Future Generations ◽  
Burden Sharing ◽  
Retirement Age ◽  
Overlapping Generations Model ◽  
Policy Debates ◽  
Age Dependency Ratio ◽  
Policy Proposals

Challenges raised by aging (increasing longevity) have prompted policy debates featuring policy proposals justified by reference to some notion of intergenerational equity. However, very different policies ranging from presavings to indexation of retirement ages have been justified in this way. We develop an overlapping-generations model in continuous time that encompasses different generations with different mortality rates and thus longevity. Allowing for trend increases in both longevity and productivity, we address the normative issue of intergenerational equity under a utilitarian criterion when future generations are better off in terms of both material and nonmaterial well-being. Increases in productivity and longevity are shown to have very different implications for intergenerational distribution. Further, the socially optimal retirement age, dependency ratio, and intergenerational burden sharing in the case of a trend increase in longevity are shown to depend on how individuals' utility for time/leisure is affected by age and longevity.

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