TY  - JOUR
AU  - Gertler,Mark
TI  - Government Debt and Social Security in a Life-Cycle Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6000
PY  - 1997
Y2  - April 1997
UR  - http://www.nber.org/papers/w6000
L1  - http://www.nber.org/papers/w6000.pdf
N1  - Author contact info:
Mark Gertler
Department of Economics
New York University
269 Mercer Street, 7th Floor
New York, NY 10003
Tel: 212/998-8931
Fax: 212/995-4186
E-Mail: mark.gertler@nyu.edu
AB  - This paper develops a tractable overlapping generations model that is useful for analyzing both the short and long run impact of fiscal policy and social security.  It modifies the Blanchard (1985)/Weil (1987) framework to allow for life/cycle behavior.  This is accomplished by introducing random transition from work to retirement, and then from retirement to death.  The transition probabilities may be picked to allow for realistic average lengths of life, work and retirement.  The resulting framework is not appreciably more difficult to analyze than the standard Cass/Koopmans one sector growth model: Besides the capital stock, there is only one additional state variable: the distribution of wealth between workers and retirees.  Under reasonable parameter values, government debt and social security have significant effects on capital intensity.
ER  -