The desirability of Government intervention in the functioning of a competitive economy arises in cases where the attained competitive equilibria are inefficient or fail to achieve certain important social goals. In the twentieth century, we witnessed a worldwide phenomena of intervention by...

This paper analyses the long-term growth and welfare impact of the transition to the market economy in the countries of Eastern Europe. We define welfare as the average real net wage after payments of social security contributions to fund a paygo-type pension system, and of taxes to service the...

We consider an overlapping generations model of small open economy with Harrod neutral technical progress. If the interest rate is less that the growth rate, intergenerational public transfers increase welfare of some generations and reduce welfare of others.

The purpose of this paper is to provide a critical evaluation of theoretical modelshowing that shifting from pay-as-you-go to funded social security schemes can be made Pareto-improving. Further, it argues that what often makes a reform toward funded schemes attractive is a number of additional...

We consider a two-period overlapping generations model in which individual voters differ not only according to age but also productivity. In such a setting, a (redistributive) Pay-As-You-Go system is politically sustainable, even when the interest rate is larger than the rate of population growth .

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...

We consider an overlapping generations model with endogenous labor supply. Individuals live for two periods and have different skills. We state equivalence properties of different transfer policies, assuming the government cannot identify individuals and has a limited range of instruments that...