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Hunting the unobservables for optimal social security a general equilibrium approach

Caliendo, Frank N and Gahramanov, Emin 2009, Hunting the unobservables for optimal social security a general equilibrium approach, Public finance review, vol. 37, no. 4, pp. 470-502.

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Title Hunting the unobservables for optimal social security a general equilibrium approach
Author(s) Caliendo, Frank N
Gahramanov, Emin
Journal name Public finance review
Volume number 37
Issue number 4
Start page 470
End page 502
Total pages 33
Publisher Sage
Place of publication Thousand Oaks, Calif.
Publication date 2009-07
ISSN 1091-1421
1552-7530
Keyword(s) optimal social security
general equilibrium
Summary We study the optimal size of a pay-as-you-go social security program for an economy composed of both permanent-income and hand-to-mouth consumers. While previous work on this topic is framed within a two-period partial equilibrium setup, we study this issue in a life-cycle general equilibrium model. Because this type of welfare analysis depends critically on unobservable preference parameters, we methodically consider all parameterizations of the unobservables that are both feasible and reasonable—all parameterizations that can mimic key features of macro data (feasible) while still being consistent with micro evidence and convention (reasonable). The baseline model predicts that the optimal tax rate is between 6 percent and 15 percent of wage income.
Language eng
Field of Research 140215 Public Economics- Taxation and Revenue
Socio Economic Objective 919999 Economic Framework not elsewhere classified
HERDC Research category C1 Refereed article in a scholarly journal
HERDC collection year 2009
Copyright notice ©2009, The Author
Persistent URL http://hdl.handle.net/10536/DRO/DU:30016649

Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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Created: Thu, 09 Jul 2009, 13:37:41 EST by Lee-Ann Stones