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Welfare and Macroeconomic Effects of the German Pension Acts of 1992 and 1999: A Dynamic CGE Study

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  • Georg Hirte

Abstract

The German Pension Act of 1992 raises the mandatory retirement age while the Act of 1999 adjusts pension benefits to demographic changes. To examine welfare and macroeconomic effects of these reform schemes, we have carried out a dynamic CGE study. The model used is an enlarged version of the Auerbach-Kotlikoff model with endogenous retirement decisions, unemployment, age-dependent rates of unemployment, health, and long-term care insurance. The simulation is performed in two stages: first, the effects of the population decline in Germany are computed ignoring the reforms and, second, the effects of the reform schemes are examined and compared with the benchmark case. The results suggest that the Act of 1992 implies welfare gains while suspending the Act of 1999 induces welfare losses. Copyright Verein fü Socialpolitik and Blackwell Publishers Ltd 2002.

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  • Georg Hirte, 2002. "Welfare and Macroeconomic Effects of the German Pension Acts of 1992 and 1999: A Dynamic CGE Study," German Economic Review, Verein für Socialpolitik, vol. 3(1), pages 81-106, February.
  • Handle: RePEc:bla:germec:v:3:y:2002:i:1:p:81-106
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    1. Broer, D. Peter & Lassila, Jukka, . "Pension Policies and Public Debt in Dynamic CGE Models," ETLA A, The Research Institute of the Finnish Economy, number 23.
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    5. Fehr, Hans, 1999. "Welfare Effects of Dynamic Tax Reforms," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 5, number urn:isbn:9783161470165, April.
    6. P. B. Sørensen, 1997. "Public finance solutions to the European unemployment problem?," Economic Policy, CEPR;CES;MSH, vol. 12(25), pages 221-264, October.
    7. Fehr Hans, 1999. "Privatization of Public Pensions in Germany: Who Gains and How Much? / Privatisierung der deutschen Rentenversicherung: Wer gewinnt und wieviel?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 218(5-6), pages 674-694, October.
    8. Gali, Jordi, 1996. "Unemployment in dynamic general equilibrium economies," European Economic Review, Elsevier, vol. 40(3-5), pages 839-845, April.
    9. Hirte Georg, 1999. "Raising the Retirement Age – Why Should Anybody Lose? / Anhebung des Rentenzugangsalters – Muss es Verlierer geben?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 219(3-4), pages 393-408, June.
    10. Hirte, Georg, 2001. "Pension Policies for an Aging Society," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 14, number urn:isbn:9783161475399, April.
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    Cited by:

    1. Stephan Brunow & Georg Hirte, 2006. "Age structure and regional economic growth," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 26(1), pages 3-23, March.
    2. Axel Börsch-Supan, 2004. "Global Aging: Issues, Answers, More Questions," MEA discussion paper series 04055, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    3. Fehr, Hans & Habermann, Christian, 2006. "Pension reform and demographic uncertainty: the case of Germany," Journal of Pension Economics and Finance, Cambridge University Press, vol. 5(01), pages 69-90, March.
    4. Honerkamp, Josef & Moog, Stefan & Raffelhüschen, Bernd, 2004. "Earlier or Later: A General Equilibrium Analysis of Bringing Forward an Already Announced Tax Reform," Discussion Papers 123, Albert-Ludwigs-Universität Freiburg, Institut für Finanzwissenschaft.
    5. Barbara Berkel & Axel Börsch-Supan & Alexander Ludwig & Joachim Winter, 2004. "Sind die Probleme der Bevölkerungsalterung durch eine höhere Geburtenrate lösbar?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 5(1), pages 71-90, February.
    6. de la Croix, David & Docquier, Frederic & Liegeois, Philippe, 2007. "Income growth in the 21st century: Forecasts with an overlapping generations model," International Journal of Forecasting, Elsevier, vol. 23(4), pages 621-635.
    7. Honerkamp, Josef & Moog, Stefan & Raffelhüschen, Bernd, 2002. "Earlier or later in CGE-models: The case of a tax reform proposal," Discussion Papers 102, Albert-Ludwigs-Universität Freiburg, Institut für Finanzwissenschaft.
    8. Börsch-Supan, Axel, 2004. "Global aging : issues, answers, more questions," Papers 07-28, Sonderforschungsbreich 504.
    9. Timm Bönke & Carsten Schröder & Katharina Schulte, 2010. "Incomes and Inequality in the Long Run: The Case of German Elderly," German Economic Review, Verein für Socialpolitik, vol. 11, pages 487-510, November.
    10. Koka, Katerina & Kosempel, Stephen, 2014. "A life-cycle analysis of ending mandatory retirement," Economic Modelling, Elsevier, vol. 38(C), pages 57-66.
    11. Kemptner, Daniel & Timm, Boenke & Holger, Luethen, 2014. "The introduction of disincentives for early retirement and its effect on labor market participation," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100446, Verein für Socialpolitik / German Economic Association.
    12. Volker Börstinghaus & Georg Hirte, 2001. "Generational Accounting versus Computable General Equilibrium," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(3), pages 227-227, July.
    13. Georg Hirte, 2003. "The Political Feasibility of Privatizing Old-Age Insurance," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 507-525, September.

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