German pension policy faces a dilemma. If it is too generous, it harms contributors, disincentivises labour supply, and crowds out education and infrastructure investment needed to pay for social protection. If it is too frugal, it harms those with social and health issues. Thus, smart...

This paper estimates the aggregate effects of government income transfers shocks for a sample of EU countries. I construct a new measure of transfers shocks based on a dataset by public finance experts of the European System of Central Banks (ESCB). The identification strategy consists of a...

Poor heath, large acute and long-term care medical expenses, and spousal death are significant drivers of impoverishment among retirees. We document these facts and build a rich, overlapping generations model that reproduces them. We use the model to assess the incentive and welfare effects of...

This paper proposes a new method for welfare analysis of unfunded social security systems. Based on an overlapping generations model with endogenous labor supply, we derive a formula for the evaluation of existing pay-as-you-go social security systems that depends on impulse response functions...

Die gesetzliche Krankenversicherung schwimmt zurzeit im Geld: Ende des 3. Quartals 2012 verfügten Gesundheitsfonds und Krankenkassen zusammen über Finanzreserven von rund 23,5 Mrd. Euro. Das schafft Begehrlichkeiten - nicht nur bei Ärzten, Apotheken und Krankenhäusern, sondern auch beim...

We ask whether a PAYG-financed social security system is welfare improving in an economy with idiosyncratic and aggregate risk. We argue that interactions between the two risks are important for this question. One is a direct interaction in the form of a countercyclical variance of idiosyncratic...

When markets are incomplete, social security can partially insure against idiosyncratic and aggregate risks. We incorporate both risks into an analytically tractable model with two overlapping generations and demonstrate that they interact over the life-cycle. The interactions appear even though...