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Myopic Behavior and International Social Security Coordination

Wen, Xue Myopic Behavior and International Social Security Coordination. Working Paper (Submitted)

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In a standard two-period overlapping generations model, two symmetric countries are involved, each with a PAYG pension system. This paper investigates the effects of myopic saving behavior on the optimal pension policy and the capital accumulation under both non-cooperative and cooperative schemes. Both the cases when pension authority maximizes the welfare function with only the current welfare of the living generations (myopic authority) and when it maximizes the lifetime welfare of the living generations are considered (farsighted authority). International cooperation among national pension authorities boosts capital accumulation when the international authorities are myopic. Moreover, the welfare gain from cooperation decreases with the size of the myopic agents in the economy. When the pension authorities are farsighted, international cooperation not necessarily depresses capital accumulation. However, if there are enough myopic agents in the economy, international cooperation also boosts capital accumulation.

Item Type: Working Paper (Working Paper)
Uncontrolled Keywords: Social Security, OLG model, Myopia, International Coordination
Subjects: H Social Sciences > HJ Public Finance
Research Area: Economics and Institutional Change
Depositing User: Users 52 not found.
Date Deposited: 02 Dec 2015 08:17
Last Modified: 02 Dec 2015 08:17
URI: http://eprints.imtlucca.it/id/eprint/2951

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