This paper investigates dynamic implications of pension contributions and intergenerational transfers under pay-as-you-go system. By incorporating interest groups' contributions to social security and subsidies from the national government into the conventional overlapping generations model, the model explores a long-run property of public spending, social security contributions and economic growth. The good economic condition will not necessarily lead to large public spending. The public good

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... s too little in terms of the static efficiency (or compared with private consumption) but may be too much or too little in terms of the dynamic efficiency (or as the steady state level). We also examine the normative role of taxes (and subsidies) on consumption and pension contributions.