Declining r∗ in the US: The role of Social Security

A-Tier
Journal: Journal of Public Economics
Year: 2025
Volume: 241
Issue: C

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We develop a quantitative life-cycle model to study the impact of Social Security on the US natural interest rate, r∗. Past reforms mitigated the r∗ decline, raising the natural rate by approximately 1 percentage point between 1970 and 2015 through higher replacement rate and retirement age. In the future, increasing the retirement age would counteract the downward pressure on r∗ due to demographics more than reforms entailing higher contribution or lower replacement rates, with the latter reform delivering the lowest r∗ value across different future productivity scenarios for the US economy.

Technical Details

RePEc Handle
repec:eee:pubeco:v:241:y:2025:i:c:s0047272724002135
Journal Field
Public
Author Count
2
Added to Database
2026-01-24