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Pension Reforms in an Aging Society: A Fully Displayed Cohort Model

  • Andras Simonovits


    (Hungarian Academy of Sciences)

We fully display a cohort model of an economy with an aging population, taking into account complications such as varying household size, habit formation, inheritance and credit constraints. Filling the model with numbers, we are able to compare different pension reforms: 1. the base run, where the contribution rate bears the entire burden of adjustment; 2. reduced accrual rates, 3. replacing wage indexation with price indexation and 4. raised retirement age. Whether the policy changes are anticipated or not, private reactions widely differ.

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Article provided by European Association Comenius - EACO in its journal DANUBE: Law and Economics Review.

Volume (Year): (2012)
Issue (Month): 4 (December)
Pages: 1-30

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Handle: RePEc:cmn:journl:y:2012:i:4:p:1-30
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  1. Andras Simonovits, 2009. "Pension Reforms in an Aging Society: A Fully Displayed Cohort Model," IEHAS Discussion Papers 0917, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  2. Alan J. Auerbach & Laurence J. Kotlikoff & Robert P. Hagemann & Giuseppe Nicoletti, 1989. "The Economic Dynamics of an Ageing Population: The Case of Four OECD Countries," OECD Economics Department Working Papers 62, OECD Publishing.
  3. Meier, Volker & Wrede, Matthias, 2010. "Pensions, fertility, and education," Journal of Pension Economics and Finance, Cambridge University Press, vol. 9(01), pages 75-93, January.
  4. Heikki Oksanen, 2004. "Public Pensions in the National Accounts and Public Finance Targets," CESifo Working Paper Series 1214, CESifo Group Munich.
  5. Börsch-Supan, Axel & Ludwig, Alexander & Winter, Joachim, 2004. "Aging, Pension Reform, and Capital Flows:," Sonderforschungsbereich 504 Publications 04-65, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  6. Glenn R. Hubbard & Jonathan Skinner & Stephen P. Zeldes, . "Precautionary Saving and Social Insurance," Rodney L. White Center for Financial Research Working Papers 03-95, Wharton School Rodney L. White Center for Financial Research.
  7. Robin Brooks, 2000. "What Will Happen To Financial Markets When The Baby Boomers Retire?," Computing in Economics and Finance 2000 92, Society for Computational Economics.
  8. James M. Poterba, 2001. "Demographic Structure And Asset Returns," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 565-584, November.
  9. John Karl Scholz & Ananth Seshadri & Surachai Khitatrakun, 2006. "Are Americans Saving "Optimally" for Retirement?," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 607-643, August.
  10. Laurence J. Kotlikoff & Lawrence H. Summers, 1980. "The Role of Intergenerational Transfers in Aggregate Capital Accumulation," NBER Working Papers 0445, National Bureau of Economic Research, Inc.
  11. Christopher D. Carroll & Jody Overland & David N. Weil, 1995. "Saving and growth with habit formation," Finance and Economics Discussion Series 95-42, Board of Governors of the Federal Reserve System (U.S.).
  12. Heikki Oksanen, 2004. "Public Pensions in the national accounts and public finance targets," European Economy - Economic Papers 207, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  13. Richard Blundell & Martin Browning & Costas Meghir, 1994. "Consumer Demand and the Life-Cycle Allocation of Household Expenditures," Review of Economic Studies, Oxford University Press, vol. 61(1), pages 57-80.
  14. R. Glenn Hubbard & Kenneth L. Judd, 1986. "Liquidity Constraints, Fiscal Policy, and Consumption," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(1), pages 1-60.
  15. Fehr, Hans, 2000. " Pension Reform during the Demographic Transition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 419-43, June.
  16. Catalán, Mario & Guajardo, Jaime & Hoffmaister, Alexander W., 2010. "Coping with Spain's aging: retirement rules and incentives," Journal of Pension Economics and Finance, Cambridge University Press, vol. 9(04), pages 549-581, October.
  17. Molnar, Gyorgy & Simonovits, Andras, 1998. "Expectations, (in)stability and (in)viability in realistic overlapping cohorts models," Journal of Economic Dynamics and Control, Elsevier, vol. 23(2), pages 303-332, September.
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