Social security reform and national wealth

Recent trends in common stock prices suggest a distinction between increase s in national net worth and flows of physical investment. In this paper we present a simple overlapping generations model in which such differences ca n arise: technological progress occurs exogenously, yet firms own new techn ologies for a time. We examine possible consequences for social security re form. Reform which increases private saving depletes part of its force rais ing the (capitalized) price of proprietary technologies. A calibrated examp le suggests an increase in physical capital one-third smaller than without inelastic factors. Both steady states and transition paths are considered.