In an OLG (overlapping generations) economy with only two risky factors of production, human capital and physical capital, a social security system that optimally shares risks among generations was incorporated. By allowing for physical capital acumulation, this paper extends John Compbell's...

We explore the benefits of intergenerational risk-sharing through both private funded pensions and via the public debt. We use a multi-period overlapping generations model with a PAYG pension pillar, a funded pension pillar and a government. Shocks are smoothed via the public debt and variations...

The paper gives conditions for dynamic inefficiency of laissez-faire allocations in an overlapping-generations model with safe and risky assets. If the rate of population growth is certain, the conditions given depend only on how the rate of return on safe assets compares to the growth rate. If...