This paper analyses the effect of reforms to the PAYG system in the context of an open economy, using an overlapping generation, general equilibrium model. Parameterization is based on the Brazilian economy. The interest rate is supposed to follow an exogenous path during the transition. Several alternatives to reforming social security are studied, from the full elimination of benefits to the simple replacement of the social security tax for consumption or corporate revenue tax. Intermediary cases, where the retirement benefits are partly eliminated are studied as well. Macroeconomic and welfare effects are derived.
social security; welfare; general equilibrium; macroeconomics; overlapping generation
