Template-Type: ReDIF-Paper 1.0
Title: Public Pensions in Transition - An Optimal Policy Path
Author-Name: Wolfgang Peters

Author-Postal: 
Author-Phone: 
Author-Homepage: 
Classification-JEL: 
Keywords: 
Abstract: The main purpose of this paper is to analyze problems 
 of financing an old-age insurance when birth rates are low 
 and population declines or fertility fluctuates with time. A 
 government then searches for optimal policies to cope with 
 such problems. A first criterion could be seen in the Pareto 
 principle. But we all know that there is no way out of PAYG 
 unless at least one generation has to pay for the transition. 
 Therefore an optimal policy is concerned with 
 intergenerational redistribution and optimal growth. In the 
 absence of public pensions the economy will in the long run 
 converge to a steady state which is not optimal in the sense 
 of a golden rule. This dynamic "in"-efficiency results from 
 the decentralized decision making by the consumers and the 
 firms. If the PAYG system influences the savings ratio of 
 the economy, public pensions can be seen as an instrument to 
 implement a modified golden rule.
Series: Sonderforschungsbereich 303, University of Bonn, Germany

Length: 
Creation-Date: 1990-03
Revision-Date: 1990-12
Handle: RePEc:bon:bonsfa:284