Key Equations in the Tuljapurkar-Lee Model of the Social Security System.

Abstract

The Tuljapurkar-Lee (henceforth \TL") model generates a large set of Monte Carlo simulations of future outcomes in the U.S. Social Security system. Four types of key macrodemographic and macroeconomic variables are modeled as stochastic components using standard time series methods. These include age-speci c mortality rates, age-speci c fertility rates, the rate of growth in real covered wages per capita, and real rates of return on two classes of nancial assets: the special-issue Treasury obligations in the Social Security Trust Fund, and the S&P 500 stock index. This paper is a revision of the technical appendix in Lee and Edwards (2002), updated to reect the modeling techniques employed during the latest round of revision to the TL model.