120,765 research outputs found

    Social Security Incidence under Uncertainty Assessing Italian Reforms

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    This paper analyzes the welfare effects of the Italian social security system in an economy with uncertainty on wages, financial market returns and life expectancy. The introduction of a pension system reproducing the Italian statutory scheme turns out to decrease ex-ante individual welfare, unless restrictions are assumed on retirement behavior. Overall, risk insurance effects of social security play a minor role in determining welfare variations. The new Italian NDC pension system is shown to yield a slight ex-ante welfare improvement from a purely risk-insurance perspective. This relative gain stems from risk diversification across working-life wages in computing benefits.social security reforms, uncertainty, risk insurance

    Scope Management of Non-Functional Requirements

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    In order to meet commitments in software projects, a realistic assessment must be made of project scope. Such an assessment relies on the availability of knowledge on the user-defined project requirements and their effort estimates and priorities, as well as their risk. This knowledge enables analysts, managers and software engineers to identify the most significant requirements from the list of requirements initially defined by the user. In practice, this scope assessment is applied to the Functional Requirements (FRs) provided by users who are unaware of, or ignore, the Non-Functional Requirements (NFRs). This paper presents ongoing research which aims at managing NFRs during the software development process. Establishing the relative priority of each NFR, and obtaining a rough estimate of the effort and risk associated with it, is integral to the software development process and to resource management. Our work extends the taxonomy of the NFR framework by integrating the concept of the "hardgoal". A functional size measure of NFRs is applied to facilitate the effort estimation process. The functional size measurement method we have chosen is COSMICFFP, which is theoretically sound and the de facto standard in the software industry

    Earnings-related mandatory pensions : concepts for design

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    The author offers a framework for economic policy on mandatory earnings-related pensions. He does not discuss the gains and losses from mandating insurance and savings, nor the use of this policy as a vehicle for income redistribution. Instead, he concentrates on areas that are less well understood: the microeconomics, the macroeconomics, and the political economy of mandatory pensions. His analysis focuses on three main areas: insurance design, privatization, and degree of funding. In each area, he provides a checklist of design issues, drawn from international experience and economic analysis. For insurance, there are two sets of choices: between flat actuarial factor or individual actuarial factor and between defined benefit or defined contribution (in the sense of financial guarantee). For privatization, the essential choices are between private or nationalized provision, and between private or national demand. For funding, the choices are between funding or not funding, and between apparent funding or pay-as-you-go financing. Some combinations can be discarded. Privatization should not be combined with flat actuarial factors, for example, because private suppliers will compete for access to rents that accrue to workers who are awarded implicit subsidies. Privatization is compatible with apparent funding, but not with pay-as-you-go financing, because in the latter there are no funds to invest in the capital market. The policy choice is ultimately between two coherent designs whose relative advantages and drawbacks the author discusses. One, is an individual actuarial factor with privatized production and demand, with risk explicitly allocated to pensions, and with partial funding. Two, is a flat actuarial factor coupled with nationalized production, pay-as-you-go financing, and statutory promises of fixed real pensions (defined benefit).Banks&Banking Reform,Environmental Economics&Policies,Health Economics&Finance,Insurance&Risk Mitigation,Pensions&Retirement Systems

    Estimating the Counterparty Risk Exposure by using the Brownian Motion Local Time

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    In recent years, the counterparty credit risk measure, namely the default risk in \emph{Over The Counter} (OTC) derivatives contracts, has received great attention by banking regulators, specifically within the frameworks of \emph{Basel II} and \emph{Basel III.} More explicitly, to obtain the related risk figures, one has first obliged to compute intermediate output functionals related to the \emph{Mark-to-Market} (MtM) position at a given time t[0,T],t \in [0, T], T being a positive, and finite, time horizon. The latter implies an enormous amount of computational effort is needed, with related highly time consuming procedures to be carried out, turning out into significant costs. To overcome latter issue, we propose a smart exploitation of the properties of the (local) time spent by the Brownian motion close to a given value

    The New Social Security Commission Personal Accounts: Where Is the Investment Principal?

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    The President's Commission to Strengthen Social Security suggests three plans for reforming Social Security. These plans divert various amounts of the payroll tax to a personal account if the worker chooses to participate in the account. In return, Social Security benefits are offset using accounts with real returns ranging from 2% to 3.5%. In addition, the second and third plans proposed by the Commission include features that are designed to balance the finances of the system by reducing the rate of growth of benefits relative to the levels prescribed under current law, to make the system more redistributive, and to make other changes. The measures to increase redistribution and resolve the solvency of the system are relatively separate from the personal accounts. When 'personal accounts' are mentioned, most people think of accounts that are in some sense separate and shielded from the uncertainties of the Social Security system. That is not the case for the personal accounts proposed by the Commission. Because the participating individual is not entitled to the principal in the account, participating in the account does not shield the individual from the political risks of being in the Social Security system. The offset to the plan essentially taxes away the principal in the account, but leaves intact the full Social Security benefit, so that any change in retirement income due to the account reflects the difference in interest earned on the portfolio beyond a stated real rate of interest offset. Thus our analysis describes the account as a financial instrument equivalent to a bet that the real return will exceed the level of offset specified in the plan, ranging from 2 percent to 3.5 percent real. As a result, the reduction in political risk fostered by the Commission's proposals comes mainly from the improvement in the financial status of the system fostered by other provisions of the recommended plans. Measures to improve the benefits of low income individuals, widows and widowers and to enhance the rewards to retirement all create incentive effects that are also discussed in the paper.

    The New Social Security Commission Personal Accounts: Where is the Investment Principal?

    Get PDF
    The President’s Commission to Strengthen Social Security suggests three plans for reforming Social Security. These plans divert various amounts of the payroll tax to a personal account if the worker chooses to participate in the account. In return, Social Security benefits are offset using accounts with real returns ranging from 2% to 3.5%. In addition, the second and third plans proposed by the Commission include features that are designed to balance the finances of the system by reducing the rate of growth of benefits relative to the levels prescribed under current law, to make the system more redistributive, and to make other changes. When “personal accounts ” are mentioned, most people think of accounts that are in some sense separate and shielded from the uncertainties of the Social Security system. That is not the case for the personal accounts proposed by the Commission. Because the participating individual is not entitled to the principal in the account, participating in the account does not shield the individual from the political risks of being in the Social Security system. As a result, the reduction in political risk fostered by the Commission’s proposals comes mainly from the improvement in the financial status of the system fostered by other provisions of the recommended plans. Measures to improve the benefits of low-income individuals, widows and widowers and to enhance the rewards to retirement all create incentive effects that are also discussed in the paper.
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