social security outcomes by racial and education groups this article evaluates the social security outcomes for different racial and education groups outcomes differ across groups due to the interactions between group specific mortality risks and lifetime earnings the benefit formula and the benefit package which includes life insurance spousal benefits and retirement pensions based on either the rate of return or present value individuals with less education fare better than those with higher educations this holds even before accounting for preretirement survivors benefits which when accounted for reinforce this finding single whites do considerably better than single blacks when outcomes are compared by internal rates of return accounting for survivors benefits reduces regressivity but blacks continue to fare worse than whites in contrast based on present values whites generally do worse than their respective counterparts social security is primarily an intergenerational transfer system providing payments to retired workers and their families financed by payroll taxes on current workers the old age and survivors insurance oasi program also provides life insurance through survivors benefits because longer lives are positively related to income the retirement pension favors workers with higher lifetime incomes other things equal conversely survivors insurance is more likely to be awarded within groups with higher mortality rates at younger ages which happens to be those with lower incomes further the benefit formula replaces a higher percentage of the income of workers with lower lifetime earnings while spousal retirement benefits favor couples in which only one spouse works as a result any particular group s outcome depends on their lifetime earnings their group specific longevity the tax rates they face and the social security benefit formula there have been quite a few studies devoted to calculating the internal rate of return and net present value of social security some consensus has been reached by those studies early generations do better than later generations women do better than men and married couples with a single earner do better than singles or working couples these results are not surprising given that a pay as you go system usually generates a higher return in its start up phase than in the mature phase that women live longer than men and that nonworking spouses receive benefits without making tax payments however to date a consensus has not been reached on some of the more interesting but less obvious issues such as how different income classes or different races fare in the system this article

estimating the demand for the characteristics of housing a hstract estimates of the demand for the characteristics contained in a differentiated product such as housing can be based on hedonic regressions however previous studies have not dealt with several potential problems in such estimation a more appropriate framework for the estimation is provided in this paper also data from a number of cities are used to eliminate the identification problem and the endogeneity of the marginal prices derived from non linear hedonic equations is considered in the estimation the results on own and cross price elasticities expenditure elasticities and the effects of socio economic vafiables accord well with expectations

optimal social security in a dynastic model with investment externalities and endogenous fertility this paper studies optimal pay as you go social security with investment externalities positive bequests and endogenous fertility with an investment externality a competitive solution without social security suffers from under investment in capital and over reproduction of population we show the existence of time consistent optimal social security that improves welfare by reducing fertility and increasing capital intensity we also illustrate numerically that a small degree of this externality can justify the observed high ratios of social security spending to gdp

identification and stochastic specification in rosen s hedonic price model abstract the use of an explicitly specified utility function to derive the inverse demand functions in s rosen s hedonic price model provides considerable insight into the correct stochastic specification of the model it turns out that except in special cases the inverse demand equations are nonlinear in parameters and cannot be formulated conveniently as regression models moreover the inverse demand functions and the hedonic price function must be estimated simultaneously to obtain consistent estimates of the parameters of these functions a tractable estimation technique is described it is desirable to derive the inverse demand functions from a utility specification that is not a strongly separable function of houses attributes since strong separability implies the existence of deterministic relations among incomes prices and observed housing attributes that may fail to hold in applications finally it is shown that the use of an explicitly specified utility function does not guarantee identification of the parameters of rosen s model

inflation financial markets and long run real activity abstract empirical evidence suggests that real activity the volume of bank lending activity and the volume of trading in equity markets are strongly positively correlated at the same time inflation and financial market activity are strongly negatively correlated in the long run as are inflation and the real rate of return on equity inflation and real activity are also negatively correlated in the long run particularly for economies with relatively high rates of inflation we present a monetary growth model in which banks and secondary capital markets play a crucial allocative function we show that at least under certain configurations of parameters the predictions of the model are consistent with these and several other observations about inflation finance and long run real activity

costs and benefits of housing subsidies to tenants from voluntary and involuntary rent control a comparison between tenures and income groups this paper estimates the economic subsides to housing for different groups using the 1988 joseph rowntree memorial trust sample survey of households an olsen type model is used to estimate consumber surplus to households from subsidized housing these estimates are compared to costs and housing services in the owner occupier market poorer families receive larger benefits than richer families transfer efficiency is not high but the local authority sector receives the greatest benefits from controlled rents

long run effects of unfunded social security with earnings dependent benefits this paper examines the effects of unfunded social security with bequests fertility and human capital by considering a mix of earnings dependent and universal social security benefits we show that social security is more likely to promote growth by reducing fertility and increasing human capital investment if its benefits are more dependent on individuals own earnings through simulations we find that the differences in the effects of social security resulting from variations in the benefit formula can be too substantial to be ignored we also investigate the welfare effect in calibrated economies c 2003 elsevier b v all rights reserved

health investment saving and public policy this paper develops an overlapping generations model in which agents invest in health to prolong life in both working and retirement periods it explores how unfunded social security with or without health subsidies affects life expectancy economic growth and welfare in particular by extending life at a possible cost of capital accumulation health subsidies and a pay as you go pension can improve welfare especially in the short run

on the choice of funtional form for hedonic price functions this study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function in simulations consumers with known utility functions bid for houses with given attributes various forms of the hedonic function are estimated using equilibrium housing prices errors in estimating marginal attribute prices are calculated by comparing each consumer s equilibrium marginal bid vector with the gradient of the hedonic function when all attributes are observed linear and quadratic box cox forms produce lowest mean percentage errors however when some attributes are unobserved or are replaced by proxies linear and linear box cox functions perform best copyright 1988 by mit press

institutions household credit composition and the business cycle we show that the negative effect of household credit growth on subsequent economic growth documented in the recent literature is not the same across countries the effect is stronger in countries with weak institutions where the fraction of consumer credit in total household credit is greater that is an important nuance as consumer credit is a sizable part of household credit in many emerging markets and its rapid buildup should be observed with the same caution as a rapid buildup in housing credit jel g21 e32 e44

benefits and consumption effects of public housing programs in belgium some aggregate results in this paper we estimate some aggregate consumption effects and the benefits of public housing programs in belgium on the basis of a small sample of individual households specifying a stone geary utility function defined on housing and other goods we develop estimates of all required inputs to calculate hick s equivalent variation we further analyze changes in consumption patterns as well as the distribution of benefits over the sample our results provide the first information on the effects of public housing in belgium derived from micro data

does social security privatization produce efficiency gains while privatizing social security can improve labor supply incentives it can also reduce risk sharing we analyze a 50 privatization using an overlapping generations model where heterogeneous agents with elastic labor supply face idiosyncratic earnings shocks and longevity uncertainty when wage shocks are insurable privatization produces about 18 100 of extra resources for each future household after all transitional losses have been compensated for with lump sum taxes when wages are not insurable privatization reduces efficiency by about 2 400 per future household we check the robustness of these results to different model specifications as well as policy reforms and arrive at several surprising conclusions first privatization performs better in a closed economy where interest rates decline with capital accumulation than in an open economy second privatization also performs better when an actuarially fair private annuity market does not exist third government matching of private contributions on a progressive basis is not very effective at restoring efficiency and can actually cause harm

house prices home equity based borrowing and the u s household leverage crisis us household leverage sharply increased in the years preceding the 2007 eco nomic recession the top panel of figure 1 shows the steady rise in household debt since 1975 which accelerated beginning in 2002 in just five years the household sector doubled its debt balance in comparison the contemporaneous increase in corporate debt was modest the middle panel shows that the increase in household debt from 2002 to 2007 translated into a striking rise in household leverage as mea sured by the debt to income ratio during the same time period corporate leverage declined the dramatic absolute and relative rise in us household leverage from 2002 to 2007 is unprecedented compared to the last 25 years one reason for the rapid expansion in household leverage during this period is that mortgage credit became more easily available to new home buyers mian and sufi 2009 strong house price appreciation from 2002 to 2006 however which may have been fueled by the availability of mortgage credit to a riskier set of new home buyers could also have had an important feedback effect on household lever age through existing homeowners given that 65 percent of us households already owned their primary residence before the acceleration in house prices the feedback from house prices to borrowing may be an important source of the rapid rise in household leverage that preceded the economic downturn our central goals in this study are to estimate how homeowner borrowing responded to the increase in house prices and to identify which homeowners responded most aggressively we examine this home equity based borrowing channel using a dataset consisting of anonymous individual credit files of a national consumer credit bureau agency we follow a random sample of over 74 000 us homeowners who owned their homes as of 1997 at an annual frequency from the end of 1997 until the end of 2008 the bottom panel of figure 1 plots the growth in debt of 1997 homeowners over time and shows that existing homeowners borrow significantly more debt as their house prices appreciate from 2002 to 2006 while the aggregate trend is suggestive

when credit bites back using data on 14 advanced countries between 1870 and 2008 we document two key facts of the modern business cycle relative to typical recessions financial crisis recessions are costlier and more credit intensive expansions tend to be followed by deeper recessions in financial crises or otherwise and slower recoveries we use local projection methods to condition on a broad set of macro economic controls to study how past credit accumulation impacts key macro economic variables such as output investment lending interest rates and inflation the facts that we uncover lend support to the idea that financial factors play an important role in the modern business cycle

the great mortgaging housing finance crises and business cycles this paper unveils a new resource for macroeconomic research a long run dataset covering disaggregated bank credit for 17 advanced economies since 1870 the new data show that the share of mortgages on banks balance sheets doubled in the course of the twentieth century driven by a sharp rise of mortgage lending to households household debt to asset ratios have risen substantially in many countries financial stability risks have been increasingly linked to real estate lending booms which are typically followed by deeper recessions and slower recoveries housing finance has come to play a central role in the modern macroeconomy

structural reform of social security governments around the world have enacted or are currently considering fundamental structural reforms of their social security pension programs the key feature in these reforms is a shift from a pure pay as you go tax financed system in which taxes on current workers are primarily distributed to current retirees to a mixed system that combines pay as you go benefits with investment based personal retirement accounts this paper discusses how such a mixed system could work in practice and how the transition to such a change could be achieved it then analyzes the economic gains that would result from shifting to a mixed system i turn next to the three problems that critics raise about any investment based plan administrative costs risk and income distribution finally i comment on some of the ad hoc proposals for dealing with the financial problem of social security without shifting to an investment based system

financial development convergence abstract we show that credit levels relative to gdp and other measures for financial development tend to converge across countries over time the results are obtained using a broad sample of countries over many years and controlling for the quality of country level institutions the efficiency of financial institutions and a range of macroeconomic variables while we find evidence for convergence in the broad sample we show that it levels off when countries reach a medium level of financial development at high levels of financial development convergence slows down even more and becomes negligible

an econometric model of housing price permanent income tenure choice and housing demand abstract this paper addresses the determination of housing price permanent income tenure choice and housing demand full housing demand elasticities incorporate the interactive effects among the four stages of the model price and income have major effects in the tenure choice equation sociodemographic variables such as age have complex effects that may be lost in simpler forms of estimation