Time-Inconsistent Preferences and Social Security
Authors:
- Ayşe İmrohoroğluAİAyşe İmrohoroğlu
- Selahattin İmrohoroğluSISelahattin İmrohoroğlu
- Douglas H. JoinesDJDouglas H. Joines
- 1 May 2003
- journal article
- Published by Oxford University Press (OUP) in The Quarterly Journal of Economics
- Vol. 118 (2) , 745-784
Abstract
In this paper we examine the role of social security in an economy populated by overlapping generations of individuals with time-inconsistent preferences who face mortality risk, individual income risk, and borrowing constraints. We find that unfunded social security lowers the capital stock, output, and consumption for consumers with time-consistent or time-inconsistent preferences. However, it may raise or lower welfare depending on the strength of time inconsistency.Keywords
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