Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/30451 
Year of Publication: 
2009
Series/Report no.: 
CESifo Working Paper No. 2746
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper considers the quantitative role of growth in the size of the social security program in contributing to the collapse of personal saving in the U.S. over the last few decades. Using a calibrated, general equilibrium life-cycle model this paper shows that social security may not be to blame. Specifically, the model predicts that a 50-percent increase in the social security tax rate (as in the U.S. over the last half century) produces a modest decline in the personal saving rate from 10 percent down to 9.6 percent. This result runs counter to some popular opinion.
Subjects: 
NIPA personal saving rate
social security
life-cycle permanent-income model
general equilibrium calibration
JEL: 
E21
D91
H55
Document Type: 
Working Paper
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