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ROOSEVELT AND PRESCOTT COME TO AN AGREEMENT.
- Source :
- Macroeconomic Dynamics; Sep2014, Vol. 18 Issue 6, p1383-1402, 20p
- Publication Year :
- 2014
-
Abstract
- Edward C. Prescott has argued that mandatory saving is socially desirable because it solves the problem of people intentionally free riding and becoming a welfare burden. Inspired by Prescott's argument, we develop a model in which rational individuals choose between saving and free riding. We find that free riding is a robust outcome for a significant share of the population and that everyone, including the free riders, benefits from the elimination of free riding through mandatory saving. Our results strengthen Prescott's position that free riding is a serious problem and that mandatory saving is socially desirable. [ABSTRACT FROM AUTHOR]
- Subjects :
- SAVINGS
PROBLEM solving
ROBUST control
SOCIAL security
CHARITIES
Subjects
Details
- Language :
- English
- ISSN :
- 13651005
- Volume :
- 18
- Issue :
- 6
- Database :
- Complementary Index
- Journal :
- Macroeconomic Dynamics
- Publication Type :
- Academic Journal
- Accession number :
- 97518810
- Full Text :
- https://doi.org/10.1017/S1365100512001009