Social Security Reform with Uninsurable Income Risk and Endogenous Borrowing Constraints

We study the aggregate effects of a social security reform in a large overlapping generations model where markets are incomplete and households face uninsurable idiosyncratic income shocks. We depart from the previous literature by assuming that, because of lack of commitment in the credit market, the borrowing constraint in the unique asset is endogenously determined by the agents' incentives to default on previous debts. We find that a model with exogenous borrowing constraints overestimates the positive e¤ect of reforming social security on the capital stock and the saving rate, compared to our model with endogenous borrowing limit. The reason is that, in the latter, the size of precautionary savings is smaller because after the reform the incentives to default on previous debts are lower and consequently households face more relaxed borrowing limits. Adding retirement accounts to the basic model does not change these conclusions, although the quantitative importance of endogenizing borrowing constraints is reduced.Social Security, Borrowing Constraints, Incomplete Marrkets, Income Risk

(El caso del ajuste liberal a la crisis)

Este trabajo prentede enriquecer el planteamiento retótico de la economía debido a McCloskey mediante la introducción de la noción de moda así como aplicarlo al llamado ajuste liberal a la crisis

Microlensing of gravitational waves by dark matter structures

Gravitational lensing of gravitational waves provides a potential new probe of dark matter structures. In this work, we consider the microlensing effect on gravitational wave signals from black hole binaries induced by low-mass dark matter halos that do not retain enough baryonic matter to hold stars. We clarify systematically when this microlensing effect is relevant and study in detail its detectability by future gravitational wave observatories. We consider lensing by cold dark matter halos and by solitonic cores that reside in fuzzy dark matter halos. Our results show that although the effect can be detectable at relatively large impact parameters, the probability of detecting such lensed events is low. In particular, we find that the expected number of events lensed by cold dark matter halos is $\mathcal{O}(0.01)$ per year for BBO and the expected number of events lensed by solitonic cores inside fuzzy dark matter halos is $\mathcal{O}(0.01)$ per year for ET. In the case that a significant fraction of dark matter consists of $\mathcal{O}(100 M_\odot)$ objects that are relatively compact, $R < \mathcal{O}(0.1\,{\rm pc})$, we show that the expected number of lensed events per year ET can be very large, $\mathcal{O}(1000)$.Comment: 27 pages, 17 figures, "minor changes

Social security reform with uninsurable income risk and endogenous borrowing constraints

We study the aggregate effects of a social security reform in a large overlapping generations model where markets are incomplete and households face uninsurable idiosyncratic income shocks. We depart from the previous literature by assuming that, because of lack of commitment in the credit market, the borrowing constraint in the unique asset is endogenously determined by the agents' incentives to default on previous debts. We find that a model with fixed borrowing constraints overestimates the positive effect of reforming social security on the capital stock and the saving rate, compared to our model with endogenous borrowing limit. The reason is that, in the latter, the size of precautionary savings is smaller because after the reform the incentives to default on previous debts are lower and consequently households face more relaxed borrowing limits. Adding retirement accounts to the basic model does not change these conclusions, although the quantitative importance of endogenizing borrowing constraints is reduced. [resumen de autor