Renormalizing the Lippmann-Schwinger equation for the one pion exchange potential

We address the question whether the cut-off dependence, which has to be introduced in order to properly define the Lippmann-Schwinger equation for the one pion exchange potential plus local (delta-function) potentials, can be removed (up to inverse powers of it) by a suitable tuning of the various (bare) coupling constants. We prove that this is indeed so both for the spin singlet and for the spin triplet channels. However, the latter requires such a strong cut-off dependence of the coupling constant associated to the non-local term which breaks orbital angular momentum conservation, that the renormalized amplitude lacks from partial wave mixing. We argue that this is an indication that this term must be treated perturbatively.Comment: 26 pages, 1 figure; extended version with references adde

W Pair Production at the LHC - I. Virtual O(alpha_s^2) Corrections in the High Energy Limit

We present the result for the two-loop and the one-loop squared virtual QCD corrections to the W boson pair production in the quark-anti-quark-annihilation channel in the limit where all kinematical invariants are large compared to the mass of the W boson. The infrared pole structure is in agreement with the prediction of Catani's general formalism for the singularities of two loop amplitudes.Comment: 22 pages, 1 figure, references added, typos corrected, final version as publishe

Ageing, Government Budgets, Retirement, and Growth

We analyze the short and long run effects of demographic ageing—increased longevity and reduced fertility—on per-capita growth. The OLG model captures direct effects, working through adjustments in the savings rate, labor supply, and capital deepening, and indirect effects, working through changes of taxes, government spending components and the retirement age in politico-economic equilibrium. Growth is driven by capital accumulation and productivity increases fueled by public investment. The closed-form solutions of the model predict taxation and the retirement age in OECD economies to increase in response to demographic ageing and per-capita growth to accelerate. If the retirement age were held constant, the growth rate in politico-economic equilibrium would essentially remain unchanged, due to a surge of social security transfers and crowding out of public investment.

Sustaining Social Security

This paper analyzes the sustainability of intergenerational transfers in politico-economic equilibrium. We argue that these transfers arise naturally in a Markov perfect equilibrium in the fundamental sate variables. In contrast to earlier literature, our explanation does not resort to altruism, commitment, or trigger strategies but rests on the incentive for young households to monopolize capital accumulation, as pointed out by Kotlikoff and Rosenthal (1990). Since transfers to the old are instrumental in that respect, the vote-maximizing platform under electoral competition sustains a large social security system. Introducing fully rational voters and probabilistic voting in the standard Diamond (1965) OLG model, we find that transfers in politico-economic equilibrium are too high relative to the social optimum. Standard functional form assumptions yield analytical solutions for both the Ramsey and the probabilistic voting case. Under realistic parameter values, the model predicts a social security tax rate of 12 percent, as compared to a Ramsey tax rate of 3.5 percent. Other predictions of the model are also consistent with the data. Analytical solutions for the case with endogenous labor supply and tax distortions show the results of the model to be robust.Social security; Intergenerational transfers; Markov perfect equilibrium; Probabilistic voting; Aggregate saving; Aggregate labor supply

Ageing, Government Budgets, Retirement, and Growth

We analyze the short and long run effects of demographic ageing—increased longevity and reduced fertility—on per-capita growth. The OLG model captures direct effects, working through adjustments in the savings rate, labor supply, and capital deepening, and indirect effects, working through changes of taxes, government spending components and the retirement age in politico-economic equilibrium. Growth is driven by capital accumulation and productivity increases fueled by public investment. The closed-form solutions of the model predict taxation and the retirement age in OECD economies to increase in response to demographic ageing and per-capita growth to accelerate. If the retirement age were held constant, the growth rate in politico-economic equilibrium would essentially remain unchanged, due to a surge of social security transfers and crowding out of public investment.ageing, government budgets, retirement, growth

Economic and Politico-Economic Equivalence of Fiscal Policies

We extend “economic equivalence” results, like the Ricardian equivalence proposition, to the political sphere where policy is chosen sequentially. We derive conditions under which a policy regime (summarizing admissible policy choices in every period) and a state are “politico-economically equivalent” to another such pair, in the sense that both pairs give rise to the same equilibrium allocation. We apply the conditions in the context of politico-economic theories of government debt as a means to i) deliver intergenerational transfers or ii) smooth tax distortions. We find that certain politico-economic models of social security or variants thereof can be re-interpreted as novel politico-economic theories of debt while other models cannot, possibly explaining the political conflict surrounding social security reform. We also find that in environments with distorting taxes, economic equivalence relations between policies with different levels of debt do not extend to the political sphere.equivalence, social security, government debt, social security reform

Transfers versus Public Investment: The Politics of Intergenerational Redistribution and Growth

In this paper we analyze tax and transfer choices in an OLG economy with capital accumulation and endogenous growth coming from public investment, such as education. We solve for a Markov perfect equilibrium when electoral competition targets the votes of young and old households. We find that when calibrating the model to match US data, it predicts levels of intergenerational transfers and of public investments that are similar to the observed ones. Furthermore the Ramsey policy for the same parameters would call for both generations to be taxed to finance public investment. If the political process internalized the benefits that public investment has on future generations, growth would be twice as high as currently observedendogenous growth; intergenerational transfers; education; probabilistic voting; Markov perfect equilibrium

Sustaining Social Security

This paper analyzes the sustainability of intergenerational transfers in politico-economic equilibrium. Embedding electoral competition for the votes of old and young households in the standard Diamond (1965) OLG model, we find that intergenerational transfers naturally arise in a Markov perfect equilibrium, even in the absence of altruism, commitment, or trigger strategies. Not internalizing the negative effects of transfers for future generations, the political process partially resolves the distributive conflict between old and young voters by shifting some of the cost of social security to the unborn. As a consequence, transfers in politico-economic equilibrium are higher than what is socially optimal. Standard functional form assumptions yield closed-form solutions for the politico-economic equilibrium as well as the equilibrium supported by the Ramsey policy. The model predicts population ageing to lead to larger social security systems, but eventually lower benefits per retiree. Under realistic parameter values, it predicts a social-security tax rate close to the actual one, but higher than the Ramsey tax rate. Closed-form solutions for the case with endogenous labor supply, tax distortions, and multiple policy instruments prove the results to be robust.social security, intergenerational transfers, probabilistic voting, Markov perfect equilibrium, saving, labor supply