G2TT
来源类型Discussion paper
规范类型论文
来源IDDP6960
DP6960 Strategic Supply Function Competition with Private Information
Xavier Vives
发表日期2008-09-23
出版年2008
语种英语
摘要In a stochastic two-period OLG model, featuring an aggregate shock to the economy, ex-ante optimality requires intergenerational risk sharing. We compare the level of time-consistent intergenerational risk sharing chosen by a social planner and by office seeking politicians. In the political setting, the transfer of resources across generations ? a PAYG pension system ? is determined as a Markov equilibrium of a probabilistic voting game. Negative shocks represented by low realized returns on the risky asset induce politicians to compensate the old through a PAYG system. Unless the young are crucial to win the election, this political system generates more intergenerational risk sharing than the (time consistent) social optimum. In particular, these transfers are more persistent and less responsive to the realization of the shock than optimal. This is because politicians anticipate their current transfers to the elderly to be compensated through offsetting transfers by future politicians, and thus have an incentive to overspend. Perhaps surprisingly, aging increases the socially optimal transfer but makes politicians less likely to overspend, by making it more costly for future politicians to compensate the current young.
主题Public Economics
关键词Markov equilibria Pension systems Social optimum
URLhttps://cepr.org/publications/dp6960
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/535797
推荐引用方式
GB/T 7714
Xavier Vives. DP6960 Strategic Supply Function Competition with Private Information. 2008.
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