496 research outputs found
The pay-as-you-go pension system as fertility insurance and an enforcement device
A PAYGO system may serve as insurance against not having children and as an enforcement device for ungrateful children who are unwilling to pay their parents a pension. In fact, the latter was
Bismarck’s historic motive for introducing this system. It is true that the PAYGO system reduces the investment in human capital, but if it is run on a sufficiently small scale, it may nevertheless bring about a welfare improvement. If, on the other hand, the scale of the system is so large that parents bequeath some of their pensions to their children, it is overdrawn and creates unnecessarily strong disincentives for human capital investment
The Welfare State and the Forces of Globalization
The emergence of the Asian tiger countries and the participation of the ex-communist countries in world trade has reduced the equilibrium price of labor in western Europe and elsewhere. However, the actual price of labor hardly reacts, because the welfare state's minimum replacement incomes are fixed. The rigidity of wages causes pathological overreactions of the European economy in terms of excessive capital exports, excessive immigration and excessive structural change towards the capital intensive export sectors. The overreactions cause unemployment, sluggish growth, a current account surplus and a high export volume, but may prevent gains from trade. Moving from a system of wage replacement incomes to one that pays wage subsidies would enable a more efficient economic reaction that would not jeopardize social goals but bring about more employment, growth and gains from trade.
The European Balance of Payments Crisis: An Introduction
Schulden; Finanzmarktkrise; Schuldenkrise; Europäische Wirtschafts- und Währungsunion
The Welfare State and the Forces of Globalization
The emergence of the Asian tiger countries and the participation of the ex-communist countries in world trade has reduced the equilibrium price of labor in western Europe and elsewhere. However, the actual price of labor hardly reacts, because the welfare state’s minimum replacement incomes are fixed. The rigidity of wages causes pathological overreactions of the European economy in terms of excessive capital exports, excessive immigration and excessive structural change towards the capital intensive export sectors. The overreactions cause unemployment, sluggish growth, a current account surplus and a high export volume, but may prevent gains from trade. To enable a more efficient economic reaction that would not jeopardize social goals but bring about more employment, growth and gains from trade, it is recommended to move the European welfare state from a system that primarily pays wage replacement incomes to one that pays wage subsidies.globalization, unemployment, welfare state
The Laggard of Europe (CESifo Forum Vol. 4, Special Issue No. 1)
CESifo Forum 1 / 2003 Special: Paper presented at the Academy of Sciences of Northrhine-Westphalia on 13 November 2002. This paper is based on Hans-Werner Sinn, Die rote Laterne, Die Gründe für die Wachstumsschwäche und die notwendigen Reformen, ifo Schnelldienst 55, 2002, No. 23, 17 December 2002, special issue. Some of the material is also contained in condensed form in European Economic Advisory Group at CESifo, Report on the European Economy 2003, Ifo Institute for Economic Research: Munich 2003, chapter 1, appendices 4 and 5.
The End of the Wheeling and Dealing
Finanzmarktkrise, Internationaler Finanzmarkt, Kapitalmarktliberalisierung, Regulierung, Vereinigte Staaten, Welt, Financial crisis, International financial market, Financial liberalization, Regulation, United States, World
Please Bring me the New York Times – On the European Roots of Richard Abel Musgrave
Richard Musgrave was one of the around 200 academic economists who emigrated from Germany when Fascism came to dominate the country. This memorial lecture traces the German and European roots of Richard Musgrave’s oeuvre, trying to shed light on his family background as well as on the political and scientific factors that influenced his education as an economist. Particular emphasis is given to the development of his notion of public goods.Richard Musgrave, Public Finance and Economic Thought
Tax Harmonization and Tax Competition in Europe
Opening Europe's borders in 1993 makes the allocation of resources more vulnerable to differences in the national tax rates. The first part of the paper demonstrates that direct consumer purchases will imply distortions resulting from diverging VAT rates and it clarifies why the frequently cited exchange rate argument is of no help. The second part shows that, in the case of direct taxation, a harmonization of tax bases is more important than a harmonization of tax rates. Either the combination of true economic depreciation and residence taxation or the combination of immediate write-off and source taxation will result in an efficient international allocation of capital, independent of the national tax rates. The paper concludes with a verdict on tax competition arguing that free migration renders a policy of income redistribution, which is interpreted as insurance against the risk of lifetime careers, impossible.
The Crisis of Germany's Pension Insurance System and How It Can Be Resolved
The paper discusses the options for a reform of the German pension system using a model developed at CES for the German Council of economic advisors to the Federal Ministry of Economics and Research. It is argued that the German pay-as-you-go-system is efficient in a present value sense but will nevertheless need the support of a funded system to avoid a financial crisis. The paper investigates the possibility of introducing obligatory private savings at a variable rate where the time path of the savings rate is chosen so as to stabilize the sum of this rate and the pay-as-you-go contribution rate, given the time path of pensions as defined in the present system.
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