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    Aging, Myopia, and the Pay-As-You-Go Public Pension Systems of the G7: A Bright Future?


    Pecchenino, Rowena A. (2005) Aging, Myopia, and the Pay-As-You-Go Public Pension Systems of the G7: A Bright Future? Journal of Public Economic Theory, 7 (3). pp. 449-470. ISSN 1097-3923

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    Abstract

    Public pension systems of the G7 countries were established in an era when contributors far outnumbered beneficiaries. Now, for each beneficiary there are fewer contributors, and this trend is projected to accelerate. To evaluate the prospects for these economies we develop an endogenous growth overlapping generations model. We analyze individuals’ behavior when their expectations regarding longevity are rational or myopic, and examine whether policies exist that can offset any adverse effects of aging. We find that while perfectly anticipated aging is welfare improving, myopia worsens welfare, puts pension systems at risk, and cannot be easily remedied by public policy. “Population aging is the single most consistent pressure on federal income security spending, as public pension spending continues its relentless upward climb.”

    Item Type: Article
    Keywords: Aging; Myopia; Pay-As-You-Go; Public Pension Systems; G7;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 8512
    Depositing User: Prof. Rowena Pecchenino
    Date Deposited: 26 Jul 2017 08:12
    Journal or Publication Title: Journal of Public Economic Theory
    Publisher: Wiley
    Refereed: Yes
    URI:

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