Welfare implications of uncertain social security reform
J Nelson - Public Finance Review, 2020 - journals.sagepub.com
Public Finance Review, 2020•journals.sagepub.com
Policy uncertainty is a type of aggregate risk that has important economic and welfare
implications. In this article, I develop a simple general equilibrium overlapping generations
model in which households are uncertain as to the type and timing of an inevitable Social
Security reform. I document how households' expectations over the path of future policy
influences their behavior. I find that the economic and welfare effects of policy uncertainty
are highly sensitive to households' beliefs over the path of future policy.
implications. In this article, I develop a simple general equilibrium overlapping generations
model in which households are uncertain as to the type and timing of an inevitable Social
Security reform. I document how households' expectations over the path of future policy
influences their behavior. I find that the economic and welfare effects of policy uncertainty
are highly sensitive to households' beliefs over the path of future policy.
Policy uncertainty is a type of aggregate risk that has important economic and welfare implications. In this article, I develop a simple general equilibrium overlapping generations model in which households are uncertain as to the type and timing of an inevitable Social Security reform. I document how households’ expectations over the path of future policy influences their behavior. I find that the economic and welfare effects of policy uncertainty are highly sensitive to households’ beliefs over the path of future policy.
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