WorldCat Identities

Smetters, Kent A. (Kent Andrew)

Works: 59 works in 310 publications in 1 language and 5,020 library holdings
Roles: Author, Editor, Contributor
Classifications: HB1, 352.480973
Publication Timeline
Most widely held works by Kent A Smetters
Fiscal and generational imbalances : new budget measures for new budget priorities by Jagadeesh Gokhale( Book )

7 editions published in 2003 in English and held by 277 WorldCat member libraries worldwide

"Many appreciate that the federal government's finances are shaky. However, few realize how really bad they are because most evaluations are based on what happened in the past - not what will happen in the future
The pension challenge : risk transfers and retirement income security by Olivia S Mitchell( Book )

15 editions published in 2003 in English and held by 271 WorldCat member libraries worldwide

This work offers new ways to think about retirement security in a volatile financial environment. Myriad retirement risks confront employees, retirees, employers, and governments. This book illustrates how stakeholders can reinvent pensions that perform well in a competitive global setting
The market for retirement financial advice by Olivia S Mitchell( Book )

12 editions published between 2013 and 2014 in English and held by 103 WorldCat member libraries worldwide

The market for retirement financial advice has never been more important and yet more in flux. The long-term shift away from traditional defined benefit pensions toward defined contribution personal accounts requires all of us to be more sophisticated today than ever before. Nevertheless, the landscape for financial advice is changing all over the world, with new rules and regulations transforming the financial advice profession. This volume explores the market for retirement financial advice, to explain what financial advisors do and how to measure their performance and impact. Who are these professionals and what standards must they abide by? How do they make money and what are their incentives? How can one protect clients from bad advice? Does advice alone bring about changes in personal financial habits? Answers to these questions, along with new technology that will decrease the delivery costs of advice, will play a transformative role in helping more households receive the quality financial advice that they need. Accordingly, this volume illuminates the market and regulatory challenges so as to enhance consumer, plan sponsor, and regulator decisions
Social Security : privatization and progressivity by Laurence J Kotlikoff( Book )

13 editions published in 1998 in English and held by 85 WorldCat member libraries worldwide

Abstract: This paper uses a large-scale overlapping generations model that features intragenerational heterogeneity to show that privatizing the U.S. Social Security System could be done on a progressive basis. We start with a close replica of the current system; specifically, we include Social Security's progressive linkages between taxes paid and benefits received. The paper compares achieving progressivity as part of privatization reform by a) providing a pay-as-you-go-financed minimum benefit to all agents at retirement independent of their contributions and b) matching contributions to private retirement accounts on a progressive basis. Although a pay-as-you-go-financed minimum benefit can enhance progressivity, it comes at the cost of substantially smaller long-run macroeconomic and welfare gains. The reasons are two: First, the ongoing unfunded liability to pay for the minimum benefit is roughly half of the unfunded liability of the current Social Security system. Maintaining this liability limits the effect of privatization on saving and capital accumulation. Second, the tax financing the flat minimum benefit is completely distortionary since the benefit one receives is independent of what one contributes. In contrast, matching worker's contributions on a progressive basis can achieve an equally progressive intragenerational distribution of welfare. But it affords much higher long-run levels of capital, labor supply, output and welfare
Opting out of social security and adverse selection by Laurence J Kotlikoff( Book )

12 editions published in 1998 in English and held by 81 WorldCat member libraries worldwide

This paper compares two general methods of privatization social security: forced participation in the new privatized system vs. letting people choose between the new system or staying in social security (i.e., opting out). Simulations are performed using a large scale perfect-foresight OLG simulation model that incorporates both intra-generational and inter-generational heterogeneity. The decision of any agent to opt out is endogenous and depends on the opting out decisions of all other agents vis-à-vis factor prices. Various tax bases are considered in financing the transition path, as well as the perceived tax-benefit linkage due to the informational problems inherent in many social security systems. We consider two cases: full and no perception Both methods of privatizing social security lead to large long- run gains for all lifetime income classes despite the intra-generational progressivity of social security, but differ in their short run effects due to adverse selection associated with opting out. Adverse selection is a key reason why many economists oppose opting out and why many plans to privatize social security systems mandate participation. This paper, however, shows this wisdom to be wide of the mark. Opting out is better at protecting the welfare of the initial elderly, even though forced participation protects their real value of social security benefits because opting out continues to collect payroll tax revenue from those who stay with social security. Opting out can mean quicker transition paths by reducing social security wealth faster than forced participation, because many will forfeit their accrued claims as the price of opting out. Yet opting out, along with a decrease in the payroll tax rate is better at shifting the burden to future workers who benefit from privatization
Finding a way out of America's demographic dilemma by Laurence J Kotlikoff( Book )

12 editions published in 2001 in English and held by 64 WorldCat member libraries worldwide

Notwithstanding the rosy short-term fiscal scenarios being advanced in Washington, the demographic transition presents the United States with a very serious fiscal crisis. In 30 years there will be twice the number of elderly, but only 15 percent more workers to help pay Social Security and Medicare benefits. A realistic reading of the government demographic projections suggests a two thirds increase in payroll tax rates over the next three to five decades. However, these forecasts ignore macroeconomic feedback effects. In particular, they ignore the possibility that the nation will have more capital per worker as the number of elderly wealth-holders rises relative to the number of young workers. More capital per worker would mean higher worker productivity, higher real wages, and the lower return to capital that worries Wall Street. It would also mean a bigger payroll tax base and a smaller rise in tax rates. On the other hand, a higher payroll tax will leave workers with less after-tax income out of which to save and, therefore, fewer retirement assets than would otherwise be the case. Thus capital deepening is not a foregone conclusion. This study develops a dynamic general equilibrium life-cycle simulation model to study these conflicting forces. The model is the first of its kind to admit realistic patterns of fertility and lifespan extension. It also features heterogeneity, within as well as across generations, and, thus, can be used to study both intra- and intergenerational equity. Unfortunately, our baseline demographic simulation, which assumes the continuation of current social security policy, shows deteriorating macroeconomic conditions that will exacerbate, rather than mitigate, our fiscal problems. Real wages per effective unit of labor fall 4 percent over the next 30 years and 10 percent over the century. For Wall Street, this bad news about real wages is good news about the real return on capital, which rises 100 basis points by 2030 and 300 basis points by 2100. The model's g
The equivalence of the Social Security's trust fund portfolio allocation and capital income tax policy by Kent A Smetters( Book )

15 editions published in 2001 in English and held by 61 WorldCat member libraries worldwide

This paper proves that the stock-bond portfolio choice of the Social Security trust fund is equivalent in general equilibrium to the tax treatment of capital income by the non-social security part of government. A larger [smaller] share of social security's portfolio invested in stocks is equivalent to a larger [smaller] symmetric linear tax on risky capital income returns received on assets held by private agents. This general-equilibrium equivalency holds despite the fact that the stock-bond portfolio choice is not neutral in the presence of several market frictions. These frictions include incomplete markets between generations as well as the presence of endogenously binding borrowing constraints within generations. To the extent that trust fund investment in equities is used to improve market efficiency in the context of these frictions, the equivalent capital income tax rate can be interpreted as a Lindahl tax. This tax gives a decentralized way of achieving the same command-economy outcome that would occur if the government directly controlled part of the capital stock. General-equilibrium simulation results, using a new overlapping-generations model with aggregate uncertainty, suggest that investing the entire US Social Security trust fund in equities is equivalent to increasing the capital income tax rate by about 4 percentage points
Moral hazard in reinsurance markets by Neil A Doherty( Book )

11 editions published in 2002 in English and held by 61 WorldCat member libraries worldwide

This paper attempts to identify moral hazard in the traditional reinsurance market. We build a multi-period principle agent model of the reinsurance transaction from which we derive predictions on premium design, monitoring, loss control and insurer risk retention. We then use panel data on U.S. property liability reinsurance to test the model. The empirical results are consistent with the model's predictions. In particular, we find evidence for the use of loss sensitive premiums when the insurer and reinsurer are not affiliates (i.e., not part of the same financial group), but little or no use of monitoring. In contrast, we find evidence for the use of monitoring when the insurer and reinsurer are affiliates, where monitoring costs are lower, but little use of price controls
Controlling the cost of minimum benefit guarantees in public pension conversions by Kent A Smetters( Book )

12 editions published in 2002 in English and held by 60 WorldCat member libraries worldwide

Unfunded defined-benefit (DB) public pension plans throughout the world are being converted to funded defined-contribution (DC) plans that typically contain a minimum benefit guarantee (DC-MB). Risk management techniques must be used to control the cost of these guarantees. The most common technique is to 'over-fund' the benefit: the contribution rate is set high enough so that the expected benefit is much larger than the guaranteed minimum benefit. This paper shows that while over-funding is very effective in controlling guarantee costs in traditional DB plans, it is highly ineffective for DC-MB plans. This result holds even at very large contribution rates and when risky investments are restricted to a very diversified index like the S & P500. Calculations show that the true risk-adjusted value of unfunded guarantees in a realistic DC-MB plan equals 40 to 90 percent (or more) of the value of the unfunded liability in the DB benefit being replaced, depending on design. This result is true even when the contribution rate in the DC-MB plan is chosen to produce an expected benefit five times larger than the DB benefit. This paper considers two approaches to controlling guarantee costs. The first approach borrows from the recent catastrophic insurance literature. A 'standardized' portfolio is guaranteed, requiring agents to accept 'basis risk' if they chose a non-standard portfolio. However, for large conversions from DB to DC-MB plans, in which there is little or no DB benefit remaining the government must still worry about any 'implicit guarantee' extending beyond the standardized portfolio, thereby enticing agents to accept a lot of basis risk (a 'Samaritan's Dilemma'). The second method, therefore, uses a more brute force approach: private portfolio returns in the good states of the world are taxed while returns in the bad states are subsidized. Both options are very effective at controlling guarantee costs, and they can be used separately or together. Calculations demonstrate that all of the u
Ricardian equivalence with incomplete household risk sharing by Shinichi Nishiyama( Book )

13 editions published in 2002 in English and held by 58 WorldCat member libraries worldwide

Several important empirical studies (e.g., Altonji, Hayashi, and Kotlikoff, 1992, 1996, 1997) find that households are not altruistically-linked in a way consistent with the standard Ricardian model, as put forward by Barro (1974). We build a two-sided altruistic-linkage model in which private transfers are made in the presence of two types of shocks: an 'observable' shock that is public information (e.g., public redistribution) and an 'unobservable' shock that is private information (e.g., idiosyncratic wages). Parents and children observe each other's total income but not each other's effort level. In the second-best optimum, unobservable shocks are only partially shared whereas, for any utility function satisfying a condition derived herein, observable shocks are fully shared. The model, therefore, can generate the low degree of risk sharing found in the recent studies, but Ricardian equivalence still holds
Is the social security trust fund worth anything? by Kent A Smetters( Book )

11 editions published in 2003 in English and held by 57 WorldCat member libraries worldwide

With over $1 trillion in assets, the U.S. Social Security trust fund is the largest pension reserve in the world, and potentially a model for other developed countries facing future financing problems. But are those assets actually worth anything?' This question has generated a heated debate in the U.S. as policymakers debate options for Social Security reform, with the understanding that the characterization of the trust fund influences these decisions. Some observers claim that the trust fund is not worth anything while others argue that it is valuable. However, different reasons are given for the same position. This paper provides a unified conceptual framework for thinking rigorously about the assets accumulated in the trust fund. Multiple perspectives of the trust fund are identified and are summarized under two categories: (I) storage technology arguments and (II) ownership arguments. Storage technology arguments focuses on whether the trust fund surpluses actually reduce the level of debt held by the public or, alternatively, are used to hide' smaller on-budget surpluses. Ownership arguments focus on property rights, i.e., how trust fund credits should be allocated regardless of whether they reduce the debt held by the public. Only the storage technology argument can be empirically tested, as we do herein. We find that there is no empirical evidence supporting the claim that trust fund assets have reduced the level of debt held by the public. In fact, the evidence suggests just the opposite: trust fund assets have probably increased the level of debt held by the public. Moreover, the adoption of a unified budget' framework in the late 1960s appears to play a statistically significant role in this result. We show how this counterintuitive result can be explained by a simple split the dollar game' where competition between two political parties exploits the ignorance of voters who don't understand that the government's reported budget surplus actually includes the off-budget' Social Secur
Consumption taxes and economic efficiency in a stochastic OLG economy by Shinichi Nishiyama( Book )

13 editions published between 2002 and 2003 in English and held by 55 WorldCat member libraries worldwide

Fundamental tax reform is examined in a heterogeneous overlapping-generations (OLG) model in which agents face idiosyncratic earnings shocks and uncertain life spans. Following Auerbach and Kotlikoff (1987), a Lump-Sum Redistribution Authority is used to rigorously examine efficiency gains over the transition path. A progressive income tax is replaced with a flat consumption tax (for example, a value-added tax or a national retail sales tax). If shocks are insurable (that is, no risk), this reform improves (interim) efficiency, a result consistent with the previous literature. But if, more realistically, shocks are uninsurable, this reform reduces efficiency, even though national wealth and output increase over the entire transition path. This efficiency loss, in large part, stems from reduced intragenerational risk sharing that was previously provided by the progressive tax system
Does social security privatization produce efficiency gains? by Shinichi Nishiyama( Book )

11 editions published in 2005 in English and held by 46 WorldCat member libraries worldwide

While privatizing Social Security can improve labor supply incentives, it can also reduce risk sharing when households face uninsurable risks. We simulate a stylized 50-percent privatization using an overlapping-generations model where heterogenous agents with elastic labor supply face idiosyncratic earnings shocks and longevity uncertainty. When wage shocks are insurable, privatization produces about $21,900 of new resources for each future household (growth adjusted over time) after all households have been fully compensated for their possible transitional losses. However, when wages are not insurable, privatization reduces efficiency by about $5,600 per future household despite improved labor supply incentives. We check the robustness of these results to different model specications and arrive at several surprising conclusions. First, privatization actually performs relatively better in a closed economy, where interest rates decline with capital accumulation, than in an open economy where capital can be accumulated without reducing interest rates. Second, privatization also performs relatively better when an actuarially-fair private annuity market does not exist than when it does exist. Third, introducing progressivity into the privatized system to restore risk sharing must be done carefully. In particular, having the government match private contributions on a progressive basis is not very effective at restoring risk sharing -- too much matching actually harms efficiency. However, increasing the progressivity of the remaining traditional system is very effective at restoring risk sharing, thereby allowing partial privatization to produce efficiency gains of $2,700 per future household
Financing losses from catastrophic risks by Kent A Smetters( Book )

2 editions published in 2008 in English and held by 2 WorldCat member libraries worldwide

Catastrophe insurance helps spread risks and increases the ability of policyholders and the economy to recover from both natural disasters and terrorist attacks. Government policies, however, may unintentionally limit the role of the private sector in insuring against catastrophic losses. Several such policies at both the state and the federal level reduce the amount of private capital supplied to insure or hedge against catastrophic risks. One reason is that those policies often become outdated as markets innovate. Policymakers have several different options to increase private risk-bearing capacity and improve the effectiveness of federal involvement. The benefits and potential costs of four options are examined: an optional federal charter for insurers that would preempt states regulation of rates; regulatory reform of capital markets risk transfer mechanisms that substitute for reinsurance; changes in the taxation of reserves held by insurers against catastrophic risks; and auctions of federal reinsurance for supercatastrophic risks
Health shocks and the demand for annuities by Sven Sinclair( Book )

2 editions published in 2004 in English and held by 2 WorldCat member libraries worldwide

Investing the social security trust fund in equities : an option pricing approach by Kent A Smetters( )

1 edition published in 1997 in English and held by 0 WorldCat member libraries worldwide

Privatizing social security in the U.S. : comparing the options by Laurence J Kotlikoff( )

1 edition published in 1998 in English and held by 0 WorldCat member libraries worldwide

Can the standard growth model explain the post-war decline in the savings rate? by Kent A Smetters( )

1 edition published in 1997 in English and held by 0 WorldCat member libraries worldwide

Privatizing versus prefunding social security in a stochastic economy by Kent A Smetters( )

1 edition published in 2000 in English and held by 0 WorldCat member libraries worldwide

Who bears the burden of the corporate tax (and why)? : the open economy case by Jane Gravelle( )

1 edition published in 1998 in English and held by 0 WorldCat member libraries worldwide

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The pension challenge : risk transfers and retirement income security
Alternative Names
Kent Smetters American economist

Smetters, K. A.

Smetters, Kent

Smetters, Kent A.

Smetters, Kent Andrew.

English (166)

The pension challenge : risk transfers and retirement income security