Questions

Scroll down to page 5 on this link to read my book review of Kotlikoff and Burns' The Coming Generational Storm: What You Need to Know About America's Economic Future.

This article on the Social Security Trustees report suggests that the system is in better shape than given credit. This article considers the importance of immigration for maintaining the part of the population that pays into the system. And here's Jay Bookman's less-than-positive take on Social Security, from the Atlanta Journal-Constitution.

Assume that the following data apply for the Chilean economy: n + g = 0.10, k = 2.5y, dk = 0.1y, and MPK x k = 0.3y. According to the Solow growth model, is savings rate in the Chilean economy (a) more than necessary to satisfy the golden rule criterion, (b) less than necessary to satisfy the golden rule criterion, or (c) just right to satisfy the golden rule criterion? Explain your answer in terms of consumption for current and future generations.

How does the status of the current account (i.e., a budget surplus or deficit) affect the level of capital worker and, by extension, the level of current savings relative to s*gold?

When did Social Security start in the United States, and what was its initial purpose with respect to encouraging worker retirement? What is the lump of labor fallacy? What is the earnings test?

What is the legal burden of Social Security payroll taxes? The economic burden?

Explain verbally and graphically why many economists argue that Social Security has had a negative effect on the capital stock.

What effect does the baby boom have on the worker-to-retiree ratio in the Social Security system, and how has this been changing over the decades?

Explain why Social Security has maintained political support over the years, in terms of young workers (Y), middle-aged workers (M), and retirees (O). What are some of the proposals discussed in class for solving Social Security-related problems?

Some economists argue that, given the plethora of savings instruments that exist in financial markets today, that Americans save too much relative to the golden rule level of saving. Do you agree?