Social security reform with uninsurable income risk and endogenous borrowing constraints

@inproceedings{Rojas2004SocialSR,
  title={Social security reform with uninsurable income risk and endogenous borrowing constraints},
  author={Juan Ar{\'a}nguiz Rojas and Carlos Urrutia},
  year={2004}
}
We study the aggregate effects of a social security reform in a large overlapping generations model where markets are incomplete and households face uninsurable idiosyncratic income shocks. We depart from the previous literature by assuming that, because of lack of commitment in the credit market, the borrowing constraint in the unique asset is endogenously determined by the agents' incentives to default on previous debts. We find that a model with fixed borrowing constraints overestimates the… CONTINUE READING

Figures and Tables from this paper.

Similar Papers