An overlapping generations model of social security with labor and capital productivity shocks and demographic shocks is studied.

The aim of the present paper is to examine the statistical properties of social expenditures projections with the use of a stochastic model.

It is generally accepted that moving from an unfunded to a funded social security system implies a welfare loss for the trasition generation, that is the generation that has to pay twice: first, saving for this own retirement and second, contributing to the pensions of the then retired...

As the U.S. population ages, a growing ratio of retirees to workers increases the burden of pay-as-you-go retirement systems. It is efficient to maintain a defined-benefit social security system? Should PAYGO benefits be reduced and private retirement savings be encoraged? To answer such policy...