Social Security needs to be fundamentally reformed without undermining its legitimate mission — forcing people to save and insure and providing forms of social insurance that the private market would either not provide or provide poorly. Although the system has done great good, it is...

Takes a critical look at Administration and Congressional proposals to increase U.S. saving. Discusses why one should care about the rate of U.S. saving and describes the U.S. saving problem using corrected measures of the U.S. net national saving rate. Concludes with some alternative...

Generational Accounting is less than seven years old, but it has spread around the world, from Norway to New Zealand. So far, 19 countries have constructed or are currently constructing generational accounts. Most of these accounts have been produced by, or with the help of, government...

America's aging coupled with high and growing old–age health and pension benefits augers for much higher payroll taxes, with damaging effects on the U.S. economy. This prognosis is supported by our analysis of a detailed dynamic life–cycle general equilibrium model. The FairTax, which...

In neoclassical models of consumption choice under earnings uncertainty changes in consumption programs from one period to the next are determined by new information received about future earnings over the period. This proposition suggests that actual consumption choices imbed extractable...

This chapter examines the micro- and macroeconomic effects of generational policies using closed and open general equilibrium dynamic life-cycle models. The models illustrate the broad array of demographic, economic, and policy issues that can be simultaneously incorporated within today’s...

This paper considers alternative ways to privatize the U.S. Social Security system. It does so using a new rational-expectations simulation model based on the Auerbach and Kotlikoff (1987) model. The new model incorporates intra-as well as intergenerational heterogeneity and is closely...

This paper uses a new large-scale dynamic simulation model to compare the equity, efficiency, and macroeconomic effects of five alternatives to the current U.S. federal income tax. These reforms are a proportional income tax, a proportional consumption tax, a flat tax, a flat tax with transition...

This paper shows how changes in generational accounts relate to the generational incidence of fiscal policy. To illustrate the relationship, it uses the Auerbach-Kotlikoff Dynamic Life-Cycle Simulation Model to compare policy-induced changes in generational accounts with actual changes in...

This paper challenges the traditional view of the corporate tax as taxing corporate capital rather than the act of incorporating. Our model has no capital. Entrepreneurs pay to go public to diversify their risk. In discouraging incorporation, the tax keeps more entrepreneurs private and exposed...