PAYG pension systems with capital mobility

Piaser, Gwanaël;Sato, Motohiro;Pestieau, Pierre
(2006) International Tax and Public Finance — Vol. 13, n° 5, p. 587-599 (2006)

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  • Piaser, GwanaëlUCLouvain
    Author
  • Sato, Motohiro
    Author
  • Pestieau, PierreUCLouvain
    Author
Abstract
This paper studies the design of an optimal pension scheme in an OLG and open economy model. The pension scheme provides a flat rate benefit and is based on the PAYG principle. It thus combines inter- and intra-generational redistribution. In this setting a number of symmetric economies are connected by an open and perfect capital market. When this number is very large, we have the small open economy case; when it is reduced to one, we have the case of autarky or perfect coordination. As the number of countries increases, there is more intragenerational redistribution, but less capital accumulation.
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Piaser, G., Sato, M., & Pestieau, P. (2006). PAYG pension systems with capital mobility. International Tax and Public Finance, 13(5), 587-599. https://doi.org/10.1007/s10797-006-6079-3 (Original work published 2006)