eprintid: 1647
rev_number: 10
eprint_status: archive
userid: 6
dir: disk0/00/00/16/47
datestamp: 2013-07-17 14:21:09
lastmod: 2014-01-24 14:14:27
status_changed: 2013-07-17 14:21:09
type: monograph
metadata_visibility: show
creators_name: Wen, Xue
creators_id: xue.wen@imtlucca.it
title: Social security in a two-country model with myopic agents
ispublished: unpub
subjects: HB
subjects: HM
divisions: EIC
full_text_status: none
monograph_type: working_paper
abstract: In a standard two-period overlapping generations model, two symmetric countries are involved, each with a PAYG pension system. This paper focuses on how myopic households may affect the optimal pension policy under both non-cooperative and cooperative schemes. It distinguish between the cases when the pension authority considers the welfare function with only the current welfare of the living generations and when they consider the lifetime welfare of the living generations. Assuming perfect international capital mobility, international cooperation among national pension authorities boosts capital accumulation when the international authority only considers the current welfare of living generations, even though the presence of myopic individuals lowers the welfare gain from cooperation. When the lifetime welfare is considered, international cooperation may depress capital accumulation, however, with enough myopes in the economy, international cooperation again boosts capital accumulation. The size of the PAYG system increases with the number of myopic individuals in the cooperative equilibrium. In the non-cooperative equilibrium, this relationship only holds when each national authority considers lifetime wellbeing of the living generation.
date: 2012
date_type: published
number:  
institution: IMT Institute for Advanced Studies Lucca
citation:   Wen, Xue  Social security in a two-country model with myopic agents.  Working Paper  # /2012        (Unpublished)