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Pension reform, savings behavior, and capital market performance


  • JENS K KE, F.


This paper shows that the capital market effects of population aging and pension reform are particularly strong in continental European economies such as France, Germany, and Italy. Reasons are threefold: these countries have large and ailing pay-as-you-go public pension systems, relatively thin capital markets and less than benchmark capital performance. The aging process will force the younger generations in these countries to provide more retirement income through own private saving. Capital markets will therefore grow in size and active institutional investors will become more important as intermediaries. Aim of this paper is to show that these changes are likely to generate beneficial side effects in terms of improved productivity and aggregate growth.
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  • B Rsch-Supan, Axel H. & Jens K Ke, F. & Winter, Joachim K., 2005. "Pension reform, savings behavior, and capital market performance," Journal of Pension Economics and Finance, Cambridge University Press, vol. 4(01), pages 87-107, March.
  • Handle: RePEc:cup:jpenef:v:4:y:2005:i:01:p:87-107_00

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    References listed on IDEAS

    1. Daniele Franco, 2002. "Italy: A Never-Ending Pension Reform," NBER Chapters,in: Social Security Pension Reform in Europe, pages 211-262 National Bureau of Economic Research, Inc.
    2. Vincenzo Galasso & Paola Profeta, 2004. "Lessons for an ageing society: the political sustainability of social security systems," Economic Policy, CEPR;CES;MSH, vol. 19(38), pages 63-115, April.
    3. Agar Brugiavini, 1999. "Social Security and Retirement in Italy," NBER Chapters,in: Social Security and Retirement around the World, pages 181-237 National Bureau of Economic Research, Inc.
    4. Castellino Onorato & Fornero Elsa, 1997. "Privatizzare la previdenza sociale? Condizioni, modalità e limiti," Politica economica, Società editrice il Mulino, issue 1, pages 3-26.
    5. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324 Elsevier.
    6. Disney, Richard, 2000. "Crises in Public Pension Programmes in OECD: What Are the Reform Options?," Economic Journal, Royal Economic Society, vol. 110(461), pages 1-23, February.
    7. Nicola Sartor & Laurence J. Kotlikoff & Willi Leibfritz, 1999. "Generational Accounts for Italy," NBER Chapters,in: Generational Accounting around the World, pages 299-324 National Bureau of Economic Research, Inc.
    8. A. Javier Hamann, 1997. "The Reform of the Pension System in Italy," IMF Working Papers 97/18, International Monetary Fund.
    9. Marcello D’Amato & Vincenzo Galasso, 2002. "Assessing the Political Sustainability of Parametric Social Security Reforms: the Case of Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 61(2), pages 171-213, December.
    10. Diamond, Peter A., 2002. "Social Security Reform," OUP Catalogue, Oxford University Press, number 9780199247899.
    11. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
    12. Sheetal K. Chand & Albert Jaeger, 1996. "Aging Populations and Public Pension Schemes," IMF Occasional Papers 147, International Monetary Fund.
    13. Disney, Richard, 1999. "Notional accounts as a pension reform strategy : an evaluation," Social Protection and Labor Policy and Technical Notes 21302, The World Bank.
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    Cited by:

    1. Axel Börsch-Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi-Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    2. Axel Börsch-Supan & Alexander Ludwig, 2010. "Old Europe Ages: Reforms and Reform Backlashes," NBER Chapters,in: Demography and the Economy, pages 169-204 National Bureau of Economic Research, Inc.
    3. Börsch-Supan, Axel, 2007. "Rational Pension Reform," Sonderforschungsbereich 504 Publications 07-25, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    4. Sylvester J. Schieber, 2010. "Aging Populations, Pension Operations, Potential Economic Disappointment and Its Allocation," NBER Chapters,in: Demography and the Economy, pages 293-325 National Bureau of Economic Research, Inc.
    5. Börsch-Supan, Axel, 2007. "Rational pension reform," Papers 07-25, Sonderforschungsbreich 504.
    6. Axel Börsch-Supan, 2005. "Risiken im Lebenszyklus: Theorie und Evidenz," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 6(4), pages 449-469, November.
    7. Börsch-Supan, A. & Härtl, K. & Leite, D.N., 2016. "Social Security and Public Insurance," Handbook of the Economics of Population Aging, Elsevier.
    8. Stefan W. Schmitz, 2005. "Demographic Developments, Funded Pension Provision and Financial Stability," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 9, pages 93-109.
    9. 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.
    10. Oksanen, Heikki, 2006. "Actuarial Neutrality across Generations Applied to Public Pensions under Population Ageing: Effects on Government Finances and National Saving," Discussion Paper 284, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    11. Börsch-Supan, Axel, 2004. "GLOBAL AGING - Issues, Answers, More Questions," Sonderforschungsbereich 504 Publications 07-28, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    12. Hans Fehr & Sabine Jokisch, 2006. "Demographischer Wandel und internationale Finanzmärkte," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(4), pages 501-517, November.
    13. Börsch-Supan, Axel & Ludwig, Alexander, 2013. "Modeling the effects of structural reforms and reform backlashes: The cases of pension and labor market reforms," Economic Modelling, Elsevier, vol. 35(C), pages 999-1007.
    14. Zandberg, Eelco & Spierdijk, Laura, 2013. "Funding of pensions and economic growth: are they really related?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(02), pages 151-167, April.
    15. 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.

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    JEL classification:

    • Z00 - Other Special Topics - - General - - - General


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