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Pension Reform, Private Saving, and the Current Account in a Small Open Economy

The macroeconomic implications of a pension reform that substitutes a high-return fully-funded system for a low-return pay-as-you-go system are discussed in an overlapping generations, neoclassical growth model. With forward-looking individuals, a debt-financed reform worsens the current account, wh...

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Bibliographic Details
Main Author: Schimmelpfennig, Axel
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2000
Series:IMF Working Papers
Subjects:
Wealth
Neoclassical
Private Pensions
Pension Spending
Social Security And Public Pensions
Public Finance & Taxation
Nonwage Labor Costs And Benefits
Taxes
Saving
Fiscal Policy
Payroll Tax
National Accounts
Labor
Expenditure
Saving And Investment
Macroeconomics: Consumption, Saving, Production, Employment, And Investment: General (includes Measurement And Data)
Pension Reform
Pensions
Macroeconomics
Macroeconomics: Consumption
Personal Income And Other Nonbusiness Taxes And Subsidies
Taxation
Public Finance
Private Savings
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:The macroeconomic implications of a pension reform that substitutes a high-return fully-funded system for a low-return pay-as-you-go system are discussed in an overlapping generations, neoclassical growth model. With forward-looking individuals, a debt-financed reform worsens the current account, while a tax-financed reform leaves the current account unchanged. With myopic individuals, a debt-financed reform leaves the current account unchanged, while a tax-financed reform improves the current account. Hence, tax-financing, which is equivalent to pre-funding, should be the preferred reform strategy in a small open economy with a weak current account position
Physical Description:30 pages
ISBN:9781451858495

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