Population Aging, Social Security and Fiscal Limits

By Burkhard Heer (University of Augsburg; CESifo (Center for Economic Studies and Ifo Institute)), Vito Polito (Cardiff Business School) & Michael Wickens (University of Cardiff; Centre for Economic Policy Research (CEPR); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)) We study the sustainability of pension systems using a life-cycle model with distortionary taxation that sets an upper limit to the real value of tax revenues. This limit implies an endogenous threshold dependency ratio, i.e. a point...