Tehran Institute for Advanced Studies (TeIAS)

/ Retirement Financing: An Optimal Reform Approach __ Ali Shourideh

Talk

Retirement Financing: An Optimal Reform Approach

May 20, 2017

Venue

Khatam University, Building No2.
Address: Mollasadra Blvd., North Shirazi St., East Daneshvar St., No.17. See location on Google map

+982189174612

Dr. Ali Shourideh

Assistant Professor of Economics at Carnegie Mellon University, Tepper School of Business

Overview

We study Pareto optimal policy reforms aimed at overhauling retirement financing as an integral part of the tax and transfer system. Our framework for policy analysis is a heterogeneous-agent overlapping-generations model that performs well in matching the aggregate and distributional features of the U.S. economy. We present a test of Pareto optimality that identifies the main source of inefficiency in the status quo policies. Our test suggests that lack of asset subsidies late in life is the main source of inefficiency when annuity markets are incomplete. We solve for Pareto optimal policy reforms and show that earnings tax reforms cannot yield efficiency gains. On the other hand, progressive asset subsidies provide a powerful tool for Pareto optimal reforms. We implement our Pareto optimal policy reform in an economy that features demographic change. The reform reduces the present discounted value of net resources consumed by each generation by about 5 percent in the steady state. These gains amount to a one-time lump-sum transfer to the initial generation equal to 9 percent of the GDP.

Biography

Dr. Ali Shourideh is an Assistant Professor of Economics at Carnegie Mellon University. Ali’s research interests focus on Macroeconomics, Public Finance, Financial Markets, Contract Theory and Dynamic Games. He has several publications on optimal contracts and taxation. All received his B.S. in Mechanical Engineering from Sharif University of Technology in 2004. In 2005, he obtained an MA in Economics from University of British Columbia, Vancouver, Canada. He received his Ph.D. in Economics from University of Minnesota, Minneapolis, in 2012.