Investing U.S. Social Security Trust Fund Assets in Private Securities

September 1, 1997

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the macroeconomic and distributional consequences of a policy change, other things being equal, that would allow U.S. Social Security trust fund assets to be invested in private securities. Improving the expected return to trust fund assets, by shifting these from government bonds to private securities, tends to reduce (increase) the future claim on national output of the current (future) working population. The effects on aggregate saving and future output depend on whether current workers interpret this policy change as affecting their future Social Security benefits.

Subject: Consumption, Extra-budgetary funds, Financial institutions, National accounts, Private savings, Public financial management (PFM), Securities, Sovereign bonds, Stocks

Keywords: asset yield, Extra-budgetary funds, foregone return, initial-period tax increase, Private savings, return to equities, savings-adjustment effect, Securities, social insurance, social security, Sovereign bonds, Stocks, trust fund, trust fund assets, WP, yield differential

Pages:
28
Volume:
1997
DOI:
https://doi.org/10.5089/9781451853568.001
Issue:
112
Series:
Working Paper No. 1997/112
Stock No:
WPIEA1121997
ISBN:
9781451853568
ISSN:
1018-5941

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