Golden Rule (fiscal policy)

About: Golden Rule (fiscal policy) is a research topic. Over the lifetime, 661 publications have been published within this topic receiving 9789 citations.

Increasing the Saving Rate: An Analysis of the Transition Path

Abstract: Suppose an economy permanently raises its saving rate. In the neoclassical growth model of the late 1950s, the economy attains an attractive new steady-state with higher per capita output and, provided the new saving rate does not exceed Phelps’s golden rule rate, higher per capita consumption. The early steady-state papers tempted readers to look longingly at the final steady-state and ignore the discomforts of the journey that might be required to reach it.

The Golden Rule

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Is there a general criterion for dynamic efficiency

Abstract: This paper analyses an overlapping generations model with absolute bequest motive It is shown that the widely accepted criterion to verify dynamic efficiency does not apply to this case In our model the social planner maximizes welfare by choosing a capital stock larger than the golden rule and a real rate of interest smaller than the rate of growth of the economy

Franco-German co-operation: productive tension

Abstract: Since the start of the Eurozone crisis in 2010, the German and French governments have been in constant conflict when it has come to finding a political response. There have been many bones of contention: financial support for Greece, pooling of debt, the role of the ECB, the introduction of economic governance, criticism of the German export model, sanctions against lax countries, the fiscal pact and the introduction of a golden rule, to name just some. These disputes were amplified by the media and public debate, which both added their sometimes excessive share of polemic1. However, in the face of an unprecedented crisis, both governments have succeeded in overcoming their disagreements, reaching a necessary consensus. Does the usefulness of Franco-German cooperation lie in the intelligent management of these differences, which alone will lead to a convergence in their national positions and European progress?

Is full annuitization socially optimal

Abstract: A seminal result Yaari holds that all pension savings should be in life-annuities. Annuities offer a higher return than standard assets and diversify mortality risk and therefore it is individually optimal to save in annuities only. This is a cornerstone result in the pensions literature where many attempts have been made to explain that individual savings in annuities is very low, the socalled annuity puzzle. But is the result that all pension savings should be in life-annuities also socially optimal? We show in a standard setting with fair annuities and dynamic efficiency that full annutization of all pensions saving is not socially optimal. Less than full annutization implies unintentional bequests and thus transfers from the old to the young, which is welfare improving under dynamic efficiency. Further, we show that no annutization can implement the Golden Rule capital stock level and analyse whether some annutization is socially optimal using a numerical analysis, which shows that it is the case under a wide range of parameter constellations.