Modeling and Estimating the Effects of Institutional Variables on a Pay-as-you-go Social Security System and on Household Saving

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Our estimates may be useful in evaluating policy proposals aiming to improve the viability and the credibility of the Pay-as-you-go social-security systems in the countries considered in the paper. The may also help promote the idea of privately funded pensions, which implies increasing private saving, a goal that can be achieved by reducing the tax rates on interest and on capital gains. At times of recession and high external indebtedness in many countries, using appropriate taxation policies that motivate private saving seems crucial in improving national saving and encouraging capital accumulation.

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