Education subsidies, social security and growth: the implications of a demographic shock

Article Abstract:

A three-period overlapping-generations model, in which growth is driven mainly by individual decisions about education, is developed to examine the normative role of education subsidies and old age pensions. A test of the model indicates that the case for positive pension benefits is rather weak and suggests that educations subsidies should be financed by lump-sum taxes on retirees. By using the model to examine how these intergenerational transfers should be adjusted in the presence of a baby boom-baby bust demographic shock, it is suggested that an appropriate policy is to increase education when the baby-boom generation is at work.

Economic aspects, Finance, Demographic aspects, Economic development, Education, Pensions, Baby boom generation, Post-baby boom generation, Generation X

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On the demographic realism of the Ricardian theory of public finance

Article Abstract:

The effects of demographic change on the validity of the Ricardian theory of public finance were discussed. Studies revealed that the immense diversity of such demographic changes renders the Ricardian model of public-debt neutrality in public finance invalid. Nonetheless, the Ricardian model could prove valuable as an ideal standard of argument for more realistic models of public finance.

Models, Public finance

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Gifts and debt buy-backs

Article Abstract:

Debt buy-back operations are examined to determine the profitability of the second market for Third World debt. The investment effects of these operations are analyzed using theory, empirics and experience. Theory shows that buy backs are profitable when the investment effect is low. On the other hand, empirics on the debt-laffer curve indicate that said investment effects are absent.

Public & Private Debt, Sovereign debt market

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