Pensions, Price Shocks, and Macroeconomic Stability in Transition Economies: Illustrations From Belarus

By Sergio Lugaresi, Ehtisham Ahmad, Jean-Luc Schneider, Alex Mourmouras

May 1, 1994

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Sergio Lugaresi, Ehtisham Ahmad, Jean-Luc Schneider, and Alex Mourmouras. Pensions, Price Shocks, and Macroeconomic Stability in Transition Economies: Illustrations From Belarus, (USA: International Monetary Fund, 1994) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

In many countries of the former Soviet Union, pensioners form a large and vulnerable group of the population, with pensions fixed in nominal terms. Attempts to “protect” this group have included a revaluation of benefits for retirees and the introduction of indexation arrangements based on recent wage and price growth. In this paper, lagged indexation arrangements are shown to have large destabilizing effects that can potentially jeopardize the macroeconomic adjustment effort, particularly as inflation begins to decelerate. Some long-term problems relating to the aging of the population and associated policies are also discussed. Illustrative examples from Belarus are presented.

Subject: Aging, Expenditure, Inflation, Labor, Pension spending, Pensions, Population and demographics, Prices, Wages

Keywords: Aging, Eastern Europe, Flat rate, Inflation, Pension spending, Pensions, Reference wage, Wage, Wage bill, Wage growth, Wage inflation, Wage revaluation, Wages, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/052
Stock No:

WPIEA0521994
ISBN:

9781451847185
ISSN:

1018-5941

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