Paper examines US pensions’ effects on natural rate

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A working paper published by the Bank of Italy analyses the effects of the US Social Security system on the country’s natural interest rate.

In Declining natural interest rate in the US: the pension system matters, Jacopo Bonchi and Giacomo Caracciolo present a life-cycle model. This is based around three overlapping generations of US citizens who pay into and then draw Social Security, the US public pension scheme introduced in 1935.

Between 1970 and 2015, the authors find, declining

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