Assessing the Paygo Tax Rate and Saving Rate in Eight OECD Countries1

摘要: We show how the paygo tax rate and the rate of private saving which maximize the expected lifetime utility of a representative household in the steady state depend on the stochastic characteristics of the rate of growth of the wage bill and the return to capital. These steady state characteristics are inferred with bootstrap techniques from annual historical data on real GDP and the real return to capital in eight OECD countries. The optimal tax rate and rate of private saving out of labor income are then estimated for each country by taking expectations over Monte Carlo simulations of the lifetime utility of a representative household. The results (incomplete in this version) suggest that observed differences in the dynamics of GDP and the return to capital explain some of the differences in the provision of retirement income.