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A Simulation Model of Global Pension Investment

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  • Landis MacKellar
  • Helmut Reisen

Abstract

How and to what extent can a high degree of global financial integration help the fast-ageing OECD benefit from the delayed ageing process in the non-OECD area? The question is being raised with increasing urgency as it is slowly understood that even fully funded pension schemes will not escape demographic pressures in the absence of considerable capital flows between the ageing OECD and the younger part of the world. A simulation with a two-region neo-classical economic-demographic model reaches two basic conclusions of importance to policy makers. First, capital flows from fast-ageing, mostly OECD countries to slowly ageing, mostly developing countries can only slightly attenuate, but not reverse, the consequences of an ageing population on falling returns to capital. Second, significant distributional effects are likely to arise from the interaction of population ageing and financial integration. Global financial integration benefits elderly lifetime savers, but hurts elderly ... Une intégration financière poussée au niveau mondial peut-elle aider les pays de l’OCDE en vieillissement rapide à tirer parti de la maturation démographique moins avancée des autres pays ? Si oui, comment et dans quelle proportion ? Ces questions deviennent de plus en plus pressantes dans un contexte où l’on prend lentement conscience que les systèmes de retraite — même entièrement capitalisés — n’échapperont pas aux contraintes démographiques en l’absence de transferts de capitaux considérables entre la zone de l’OCDE et les pays plus jeunes. Un modèle de simulation néoclassique « économie-démographie » portant sur deux régions met en évidence deux conclusions fondamentales pour les décideurs. D’une part, les flux de capitaux depuis les pays à vieillissement rapide (principalement la zone de l’OCDE) vers les pays plus jeunes (surtout des pays en développement) ne peuvent qu’atténuer légèrement — sans les annuler — les effets du vieillissement sur la baisse des rendements du ...

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 137.

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Date of creation: Aug 1998
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Handle: RePEc:oec:devaaa:137-en

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Cited by:
  1. A.V. Dobronogov, 1998. "Systems Analysis of Social Security in a Transition Economy: The Ukrainian Case," Working Papers, International Institute for Applied Systems Analysis ir98073, International Institute for Applied Systems Analysis.
  2. Narciso, Alexandre, 2010. "The impact of population ageing on international capital flows," MPRA Paper 26457, University Library of Munich, Germany.
  3. Eduardo Siandra, 1999. "La inversión extranjera de los fondos de pensiones y el desarrollo del mercado de capitales doméstico," Documentos de Trabajo (working papers), Department of Economics - dECON 0599, Department of Economics - dECON.
  4. Holzmann, Robert, 2000. "Can investments in emerging markets help to solve the aging problem ?," Social Protection Discussion Papers 23070, The World Bank.
  5. A. Westlund & T.Y. Ermolieva & F.L. MacKellar, 1999. "Analysis and Forecasting of Social Security: A Study of Robustness," Working Papers, International Institute for Applied Systems Analysis ir99004, International Institute for Applied Systems Analysis.
  6. Helmut Reisen, 1998. "Sustainable and Excessive Current Account Deficits," OECD Development Centre Working Papers, OECD Publishing 132, OECD Publishing.
  7. F.L. MacKellar & T.Y. Ermolieva & H. Reisen, 1999. "Globalization, Social Security, and International Transfers," Working Papers, International Institute for Applied Systems Analysis ir99056, International Institute for Applied Systems Analysis.
  8. F.L. MacKellar & T.Y. Ermolieva, 1999. "The IIASA Social Security Reform Project Multiregional Economic-Demographic Growth Model: Policy Background and Algebraic Structure," Working Papers, International Institute for Applied Systems Analysis ir99007, International Institute for Applied Systems Analysis.
  9. Mosolygó, Zsuzsa, 2010. "A tőkefedezeti rendszer alapkérdéseinek új megközelítése
    [A new approach to the basic issues raised by the PAYE system]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 612-633.

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