PAYG pension systems with capital mobility

Abstract

This paper studies the design of an optimal pension scheme in an OLG and open economy model. The pension scheme provides a flat rate benefit and is based on the PAYG principle. It thus combines inter- and intra-generational redistribution. In this setting a number of symmetric economies are connected by an open and perfect capital market. When this number is very large, we have the small open economy case; when it is reduced to one, we have the case of autarky or perfect coordination. As the number of countries increases, there is more intragenerational redistribution, but less capital accumulation

Dynamic efficiency and the two-part golden rule with heterogeneous agents

“…Given the pivotal role played by the golden rule, our results may also provide useful inference with regard to the social security literature (e.g., Persson and Tabellini, 2000;Pestieau et al, 2006), where it is often argued that Beveridge schemes are redistributive, while Bismarck schemes are not. 4 In the current case, we find that both schemes redistribute resources through their induced factor-price changes.…”

Population Dynamics and Regional Social Security Sustainability in Italy

“…The political sustainers of pension policy managed at a regional level look at some social security indicators like the ratio between pension spending and the number of employees as well as the index of social security coverage (the amount of pension contributions over pension benefits) at a regional level (PESTIEAU et al, 2006). Such indicators reveal that northern regions are, in general, more virtuous than those in the South, which results in a burden for the entire national public pension system.…”

The International Spillover Effects of Pension Reform

“…Other papers that study the open economy aspects of pension schemes using smaller models are, for example,Pestieau et al (2006), who consider the issue of the optimal PAYG scheme in a setting where the number of symmetric countries changes, andBräuninger (1999), who focuses on the optimal degree of social security funding in a two-country framework. We, however, abstract from optimality issues.…”