Impact of Government Debt Settlement on the Financial Sustainability of the Social Security Organization and Macroeconomic Variables in a DSGE Model

Document Type : Research Article

Authors

1 PhD Candidate in Economics (Econometrics/Finance), Department of Economics, Faculity of Economics, University of Tehran, Tehran, Iran.

2 Associate Professor, Department of Economics, Faculity of Economics, University of Tehran, Tehran, Iran (Corresponding Author).

3 Assistant Professor, Department of Economics, Faculity of Economics, University of Tehran, Tehran, Iran.

10.22084/aes.2025.30172.3741

Abstract

The Social Security Organization is the only major fund in the country with the lowest share of governmental support. This highlights the need for careful attention to the organization’s revenues and expenditures. On the other hand, one of the most pressing challenges in the country today is the financial issues of pension funds, which manifest as a deficit of resources compared to expenditures. If not addressed, this issue could significantly impact the entire economy. In the present study, efforts will first focus on addressing, through actuarial models, how the financial sustainability of the Social Security Organization would change with increased government contributions. Subsequently, the organization’s financial sustainability will be evaluated within a dynamic stochastic general equilibrium (DSGE) framework. Finally, the outputs of these two models will be compared using data from 2016 to 2022. The findings indicate that a government expenditure shock increases financial sustainability in the actuarial model, as it boosts the Social Security Organization’s revenues. Consequently, the current value of the organization’s assets relative to its updated obligations improves. However, the DSGE model reveals that the updated value of the organization’s assets undergoes minimal changes. This is due to labor market disruptions, including reduced willingness to work and increased wages. Moreover, the updated obligations of the fund decrease, leading to improved financial sustainability, though this improvement is less pronounced than in the actuarial calculations. Ultimately, it can be concluded that government debt settlement with the Social Security Organization has a positive effect on its financial sustainability.

Keywords

Main Subjects

References

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Journal of Applied Economics Studies in Iran
Volume 14, Issue 56
February 2026
Pages 203-243

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