A Framework for Assessing the Costs of Pension Reform Reversals
IMF Working Papers, July 17, 2020
Source details
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- A Framework for Assessing the Costs of Pension Reform Reversals
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Bibliographic details
- Authors: Daniel Baksa, Zsuzsa Munkacsi, Carolin Nerlich
- Published: July 17, 2020
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513550497.001
Summary
- Authors: Daniel Baksa, Zsuzsa Munkacsi, Carolin Nerlich
- Date: July 17, 2020
- Core objective: Present a framework to quantify the macroeconomic and fiscal costs of reversing previously adopted pension reforms.
- High-level conclusion: Undoing past pension reforms would generate substantial adverse macroeconomic costs and could pose challenges for fiscal sustainability.
Methodology and Model
- Approach: Integrate country-specific information from the latest Ageing Report into a dynamic general equilibrium model with overlapping generations.
- Model performance: The model replicates the Ageing Report’s pension expenditure projections very well.
- Analytical steps:
- Calculate macroeconomic impact of additional pension reforms needed to contain public debt pressures arising from population ageing.
- Calculate costs of reform reversals.
Country Cases
- Focus countries: Germany and Slovakia
- Role of cases: Used to illustrate model calibration and quantify country-specific macroeconomic and fiscal effects.
Key Findings and Quantitative Points
- Reversing past pension reforms generates substantial adverse macroeconomic costs.
- Reform reversals could pose challenges for fiscal sustainability.
- Technical fidelity: Model replicates Ageing Report pension expenditure projections (no numerical deviation provided on the page).
Subjects and Keywords
- Subjects: Aging, Expenditure, Labor, Pension reform, Pension spending, Population and demographics, Public debt, Retirement
- Keywords: adverse impact, Ageing Report, Aging, benefit ratio, contribution rate, Europe, labour force, old-age dependency ratio, overlapping generations model, Pension reform, Pension spending, population ageing, public debt-to-GDP ratio, public pension, reform reversals, Retirement, WP
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- Working Paper