1. Reflections: Pitfalls and Possibilities A View from the South Cassio M. Turra Princeton University

2. Why should we be enthusiastic? –Impact of first results in 2000. –Historical data can elucidate determinants of intergenerational transfers. –Lee’s model has evolved: golden-rule and steady- state assumptions have been relaxed. Integration with Mason’s saving model. –More emphasis on the role played by familial transfers: 70% of municipalities in Brazil have higher income from SS than FPM.

3. Reflecting on Latin America’s Economy –Effects of Inflation: “Transfer Role”: Inflation Tax –3.5% of GDP in 1987 (Brazil) –We don’t know the age profile of holders of currency “Transfer Role”: Partial indexation of the economy. –Retirement Benefits may have lost real value during the 1980s. “Credit Role”: Money supply

4. YearInflationIT/GDP 197738.81.70 197840.81.79 197977.22.82 1980110.23.04 198195.22.25 198299.72.20 1983211.02.97 1984223.82.23 1985235.12.11 198665.01.17 1987415.83.53 Inflation Tax in Brazil (Simonsen and Cysne 1989)

5. –Future Trends: Determinants of Interest Rate –Is the rate endogenous in the model? –How sensitive are the results to changes in the rate used in the model? Determinants of Growth Rate –Is the rate endogenous in the model? –What’s the role played by public expenditures with education and health in promoting economic growth? Reflecting on Latin America’s Economy

6. Possibilities: Intergenerational Transfers and Poverty –Bravo’s suggestion last meeting; PB in Brazil –Intergenerational equity: concept loses importance in face of persistent inequality and current poverty rates in Latin America. –Historical data and future trends can cast light on the dynamics of inequality in Latin America –Discussion on public policy changes and intergenerational transfers can’t be divorced from debate on poverty.

7. Age, Poverty Rates and Public Transfers in Brazil (Paes de Barros and Carvalho 2003)

8. Possibilities: Inter and Intra-generational Transfers –How valid is the concept of “average individual” in a heterogeneous country? –Life cycle trajectories and demographic changes may vary substantially among population subgroups. –Example1: Differences between pay-as-you-go systems for private workers and civil servants. –Example 2: Informal economy.