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Public pensions and the role of real versus financial capital

Published online by Cambridge University Press:  09 May 2005

BERTHOLD U. WIGGER
BERTHOLD U. WIGGER
Affiliation:
University of Erlangen-Nuremberg, Department of Economics, Lange Gasse 20, 90403 Nuremberg, Germany (e-mail: [email protected])
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Abstract

The paper introduces an unfunded public pension program into an overlapping generations framework recently proposed by Magill and Quinzii (2003). The crucial distinction of the Magill and Quinzii framework is that the financial value of a firm may be lower than the replacement value of its capital. The present paper shows that in this framework unfunded public pensions negatively affect the financial value of firms but have no effect on real capital accumulation and welfare.

Type
Research Article
Information
Journal of Pension Economics & Finance , Volume 4 , Issue 1 , March 2005 , pp. 7 - 16
Copyright
© 2005 Cambridge University Press

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