PAYG pensions and economic cycles

This article analyses the dynamics of an overlapping generations economy (Diamond, 1965) with pay-as-you-go financed public pensions and myopic expectations. It is shown that large PAYG pensions triggers economic fluctuations depending on the mutual relationship between technology and preference parameters. Our findings constitute a policy warning about the size of social security and provide another explanation of the occurrence of persistent cycles.

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Year of publication:	2010-01-12
Authors:	Fanti, Luciano ; Gori, Luca
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	Myopic foresight \| PAYG pensions \| Stability \| OLG model

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	H55 - Social Security and Public Pensions ; J26 - Retirement; Retirement Policies ; C62 - Existence and Stability Conditions of Equilibrium
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008543522