The Economics Subject Group, Hull University Business School is pleased to announce the following research seminar:
The fear of hyperinflation and preferences for
defined-benefit social security
Mark Roberts
Nottingham University
Venue: Derwent, Lecture Theatre 3
Date: Thursday, 23 April, 2015. Time: 4.15 pm
Abstract
A model is presented where the Beveridgean (earnings-related) component of a pay-as-yougo pension is determined as an ex post budgetary response by a policy-maker also concerned
with government consumption, while the Bismarckian (flat-rate) component is determined in
advance by a popular vote. While financial uncertainty in general will create a demand for
some form of unfunded social security, the budgetary uncertainty leading to and encapsulated
in the fear of hyperinflation will promote a specifically defined-benefit scheme, since this
may allow pension benefits to be prioritized over other payments. The model is supported by
the known positive and, as we also discover in the data, convex relationship between the
benefit replacement rate, but main evidence is that is countries once bitten by hyperinflation
appear to be twice shy of Beveridgean pensions.
Biography:
Mark Roberts am a Lecturer at the University of Nottingham, and work in the area of
macroeconomic theory looking at issues of public finance, namely, government debt and
social security.