Population ageing implies that the large pay-as-you-go social security programmes implemented in many OECD economies will run into severe financial problems. By means of a numerical overlapping generations model, this paper investigates the intergenerational welfare effects of a transition to...

This paper explains counterintuitive effects of a tax cut on current consumption in a small open economy where the government is endowed with an uncertain resource wealth. Depending on fiscal policy and the extraction path of the resource, different generations face different risks regarding...

This Handbook provides an authoritative overview of current research in the field of cost–benefit analysis and is designed as a starting point for those interested in undertaking advanced research. The Handbook contains major contributions to the development of the field, focussing on...

Adopting a portfolio choice approach to pension design, we derive illuminating closed form solutions for optimal pay-as-you-go social security programs. We demonstrate that the nature of the implied risk-sharing effects and their magnitudes are sensitive to the stochastic specification of...

Many reform proposals of the social security systems in various OECD economies suggest to scale down the non-actuarial parts of the pension systems. These reforms have a flavor of increased efficiency at the costs of welfare losses for low-income individuals. Assessing the economic effects, we...

Should the government run fiscal deficits in response to an adverse external shock that warrants transfer of resources from production of nontraded to traded goods? This article considers normative fiscal policy implications of sectoral adjustment costs in a two-sector model with overlapping...