Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/190483
Authors: 
Simonovits, András
Year of Publication: 
2017
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2017/22
Abstract: 
In his seminal model (Feldstein, 1985), the government operates a social security system to counter the representative worker's myopia. (i) For a complete myope, he determined a sizable optimal tax rate (and the corresponding benefit level). (ii) For a partially shortsighted worker, he determined another optimum, which was much lower, possibly zero. Departing from Feldstein, I take into account that neither a paternalistic government nor a cautious bank tolerates long-term negative saving, and then even in (ii), the government may choose the first rather than the second optimum. Having revised it, Feldstein's model regains its place in the textbooks.
Subjects: 
social security
myopia
paternalism
social welfare
JEL: 
D10
H55
J13
J14
J18
J26
ISBN: 
978-615-5457-12-8
Document Type: 
Working Paper
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