This paper develops a tractable overlapping generations model that is useful for
analyzing both the short and long run impact of fiscal policy and social security.
It modifies the Blanchard (1985)/Weil (1987) framework to allow for life/cycle behavior.
This is accomplished by introducing random transition from work to retirement, and
then from retirement to death. The transition probabilities may be picked to allow
for realistic average lengths of life, work and retirement. The resulting framework
is not appreciably more difficult to analyze than the standard Cass/Koopmans one
sector growth model: Besides the capital stock, there is only one additional state
variable: the distribution of wealth between workers and retirees. Under reasonable
parameter values, government debt and social security have significant effects on