@techreport{Barbie2000Dynamic,
abstract = {We analyze the interaction between risk sharing and capital accumulation in a stochastic OLG
model with production. We give a complete characterization of interim Pareto optimality. Our
characterization also subsumes equilibria with a PAYG social security system. In a competitive
equilibrium interim Pareto optimality is equivalent to intergenerational exchange efficiency, which
in turn implies dynamic efficiency. Furthermore, contrary to the case of certainty, dynamic efficiency
does not rule out a Pareto-improving role for a social security system. Social security can
provide insurance against macroeconomic risk, namely aggregate productivity risk in the second
period of life (old age) through dynamic risk sharing. The mechanism through which social
security can Pareto-improve market allocations resembles a Ponzi scheme. But instead of rolling
over debt, we can interpret our scheme as one that raises contributions and then rolls over an
insurance contract.},
author = {Martin Barbie and Marcus Hagedorn and Ashok Kaul},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {H55; D61; 330; Stochastic OLG Model; Dynamic Efficiency; Interim Pareto Optimality; Social Security; Risk Sharing; Soziale Sicherung; Sozialversicherungsfinanzierung; Overlapping Generations; Stochastischer Prozess; Investition; Dynamisches Gleichgewicht; Allokationseffizienz; Pareto-Optimum; Theorie},
language = {eng},
number = {209},
title = {Dynamic Efficiency and Pareto Optimality in a Stochastic OLG Model with Production and Social Security},
type = {IZA Discussion paper series},
url = {http://hdl.handle.net/10419/21054},
year = {2000}
}
