Social security and savings plans in overlapping-generations models

This paper examines the impact of social security and saving plans on a simple overlapping-generations model with no uncertainty. The model is related to, and provides a reconciliation of, the Diamond and Samuelson–Gale models of public debt and public capital. Savings plans and pay-as-you-go social security are seen to have quite different effects depending on the assumptions governing the growth rates of public debt and capital, and it is also shown that the social security program proposed by Feldstein is infeasible in the steady state he adopts as a starting-point.