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Sustainability of the Slovenian Pension System: An Analysis with an Overlapping-generations General Equilibrium Model

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Author Info

  • Miroslav Verbic

    (Institute for Economic Research Ljubljana)

  • Boris Majcen

    (Institute for Economic Research Ljubljana)

  • Renger van Nieuwkoop

    (ECOPLAN Berne)

Abstract

The article presents an analysis of welfare effects in Slovenia, an analysis of macroeconomic effects of the Slovenian pension reform and an analysis of effects of the pension fund deficit on sustainability of Slovenian public finances with a dynamic OLG general equilibrium model. It has been established that while young generations and new generations will lose from the pension reform, even complete implementation of the reform might not be sufficient to compensate unfavourable demographic developments. The level of expected deficit of the PAYG-financed state pension fund seems to be most worrying. Financing the pension system with VAT revenues as an extreme case could result in more sustainable public finances, since GDP and welfare levels ought to increase, yet this might be infeasible to implement politically, given that the generations of voters would have their welfare decreased. In addition, the present pension system is intransparent and tremendously complicated and should primarily be made more comprehensible to the public.

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File URL: http://128.118.178.162/eps/ge/papers/0507/0507010.pdf
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Bibliographic Info

Paper provided by EconWPA in its series GE, Growth, Math methods with number 0507010.

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Length: 24 pages
Date of creation: 19 Jul 2005
Date of revision:
Handle: RePEc:wpa:wuwpge:0507010

Note: Type of Document - pdf; pages: 24
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Web page: http://128.118.178.162

Related research

Keywords: general equilibrium models; macroeconomic effects; OLG-GE; PAYG; pension system; sustainability of public finances; Slovenia; welfare analysis;

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References

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  1. Andrew B. Abel, 2002. "The effects of a baby boom on stock prices and capital accumulation in the presence of Social Security," Working Papers 03-2, Federal Reserve Bank of Philadelphia.
  2. Rutherford, Thomas F., 1995. "Extension of GAMS for complementarity problems arising in applied economic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1299-1324, November.
  3. James M. Poterba, 2001. "Demographic Structure And Asset Returns," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 565-584, November.
  4. Modigliani, Franco, 1985. "Life Cycle, Individual Thrift and the Wealth of Nations," Nobel Prize in Economics documents, Nobel Prize Committee 1985-1, Nobel Prize Committee.
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Citations

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Cited by:
  1. Robert Holzmann & Ufuk Guven, 2009. "Adequacy of Retirement Income after Pension Reforms in Central, Eastern, and Southern Europe : Eight Country Studies," World Bank Publications, The World Bank, number 2610.
  2. Miroslav Verbic, 2007. "Varying the Parameters of the Slovenian Pension System: an Analysis with an Overlapping-Generations General Equilibrium Model," Post-Communist Economies, Taylor & Francis Journals, vol. 19(4), pages 449-470.
  3. Miroslav Verbic, 2008. "The Ageing Population and the Associated Challenges of the Slovenian Pension System," Financial Theory and Practice, Institute of Public Finance, Institute of Public Finance, vol. 32(3), pages 321-338.
  4. Polanec, Sašo & Ahčan, Aleš & Verbič, Miroslav, 2010. "Retirement Decisions in Transition: Microeconometric Evidence from Slovenia," MPRA Paper 28460, University Library of Munich, Germany.
  5. Robert Holzmann & Landis MacKellar & Jana Repansek, 2009. "Pension Reform in Southeastern Europe : Linking to Labor and Financial Market Reforms," World Bank Publications, The World Bank, number 2587.
  6. Verbic, Miroslav, 2007. "Modelling the pension system in an overlapping-generations general equilibrium modelling framework," MPRA Paper 10350, University Library of Munich, Germany.
  7. Miroslav Verbič & Boris Majcen & Olga Ivanova & Mitja Čok, 2011. "R&D and Economic Growth in Slovenia: A Dynamic General Equilibrium Approach with Endogenous Growth," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(1), pages 67-89, March.
  8. Jan Hagemejer & Krzysztof Makarski & Joanna Tyrowicz, 2013. "Efficiency of the pension reform: the welfare effects of various fiscal closures," Working Papers 2013-23, Faculty of Economic Sciences, University of Warsaw.
  9. Miroslav Verbic, 2005. "A Quarterly Econometric Model of the Slovenian Economy," Econometrics 0511015, EconWPA.
  10. Verbic, Miroslav, 2007. "Supplementary pension insurance in Slovenia: an analysis with an overlapping-generations general equilibrium model," MPRA Paper 10352, University Library of Munich, Germany.

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