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208-2011-L7 - Econ208 MarekKapicka Lecture7 SocialSecurity...

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Econ 208 Marek Kapicka Lecture 7 Social Security Taxation
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What To Do n Midterm next Wednesday n Read: DLS, Chapter 12.3 (Social  Security) n Exercises at the end of chapter 12 n Read: DLS, Chapter 13.1-13.2 n Exercises 13.1-13.4
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Where are we? n Introduction: A model with no Government n The Effects of Government Spending n Government Taxation and Government Debt n Fiscal and Monetary Policy n Optimal Monetary Policy n Financial Intermediation n Current Account Determination n Fiscal Deficits and Current Account
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Roadmap n Government Expenditures n A) Data on Govt Expenditures n B) Permanent Changes in Gov’t Spending n C) Temporary Changes in Gov’t Spending n D) Empirical Evidence n E) Transfers: Social Security
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Transfers  
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Social Security n Two Types of SS n PAYG n Fully Funded  n 2 periods: young and old n N  old people,  N’  young people N n N ) 1 ( + =
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PAYG n Young pay SS taxes  t n Old receive benefits  b n Balanced budged each period n PAYG introduced in period T n b t Nb t N + = = 1
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PAYG for Consumers Who Are Old in  Period  T
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PAYG for Consumers Born in Period  T  and Later
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PAYG for Consumers Born in  Period  T  and Later n Change in wealth depends on  r  and  n n
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