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Pensions under Ageing Populations and the EU Stability and Growth Pact

Author

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  • Roel Beetsma
  • Heikki Oksanen

Abstract

This article explores how the Stability and Growth Pact (SGP) may cope with the future costs of population ageing in the European Union. Clearly, population ageing has forced countries to reform their pension systems, and will continue to do so, both by reducing the generosity of pension arrangements and by switching to funding rather than relying on pure pay-as-you go pension provision. We study how such reforms affect the room for adhering to the SGP, but also how the SGP may induce or hamper the incentives for reform. We will refer to recent literature on ageing and pensions and on the SGP. We also calibrate a simple model for addressing intergenerational equity and discuss its implications for the SGP. (JEL codes: H11, H55, H60) Copyright , Oxford University Press.

Suggested Citation

  • Roel Beetsma & Heikki Oksanen, 2008. "Pensions under Ageing Populations and the EU Stability and Growth Pact ," CESifo Economic Studies, CESifo, vol. 54(4), pages 563-592, December.
  • Handle: RePEc:oup:cesifo:v:54:y:2008:i:4:p:563-592
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifn031
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    References listed on IDEAS

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    1. Paul van den Noord & Richard Herd, 1993. "Pension Liabilities in the Seven Major Economies," OECD Economics Department Working Papers 142, OECD Publishing.
    2. Guido Tabellini, 2003. "Principles of Policymaking in the European Union: An Economic Perspective," CESifo Economic Studies, CESifo, vol. 49(1), pages 75-102.
    3. Heikki Oksanen, 2004. "Pension reforms: an illustrated basic analysis," European Economy - Economic Papers 2008 - 2015 201, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    5. Assaf Razin & Efraim Sadka & Phillip Swagel, 2002. "The Aging Population and the Size of the Welfare State," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 900-918, August.
    6. Sinn, Hans-Werner, 2004. "The pay-as-you-go pension system as fertility insurance and an enforcement device," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1335-1357, July.
    7. Jonas Fischer & Lars Jonung & Martin Larch, 2007. "101 Proposals to reform the Stability and Growth Pact. Why so many? A Survey," European Economy - Economic Papers 2008 - 2015 267, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    8. Oksanen, Heikki, 2005. "Public pensions in the national accounts and public finance targets," Journal of Pension Economics and Finance, Cambridge University Press, vol. 4(03), pages 291-312, November.
    9. Sinn, Hans-Werner, 2000. "Why a Funded Pension System is Useful and Why It is Not Useful," Munich Reprints in Economics 19859, University of Munich, Department of Economics.
    10. Heikki Oksanen, 2003. "Population ageing and public finance targets," European Economy - Economic Papers 2008 - 2015 196, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    11. Benoiˆt Coeure´ & Jean Pisani-Ferry, 2005. "Fiscal Policy in Emu: Towards a Sustainability and Growth Pact?," Oxford Review of Economic Policy, Oxford University Press, vol. 21(4), pages 598-617, Winter.
    12. Phillip L Swagel & Efraim Sadka & Assaf Razin, 2002. "The Aging of the Population and the Size of the Welfare State," IMF Working Papers 02/68, International Monetary Fund.
    13. Barry Eichengreen & Charles Wyplosz, 1998. "The Stability Pact: more than a minor nuisance?," Economic Policy, CEPR;CES;MSH, vol. 13(26), pages 65-113, April.
    14. Vincenzo Galasso, 2008. "The Political Future of Social Security in Aging Societies," MIT Press Books, The MIT Press, edition 1, volume 1, number 026257246x, March.
    15. Charles Wyplosz, 2005. "Fiscal Policy: Institutions versus Rules," National Institute Economic Review, National Institute of Economic and Social Research, vol. 191(1), pages 64-78, January.
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    17. Hans-Werner Sinn, 2000. "Why a Funded Pension System is Needed and Why It is Not Needed," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(4), pages 389-410, August.
    18. Buti Marco & Martins João Nogueira, 2006. "Reducing Implicit Liabilities: The New Stability Pact Will (Moderately) Help," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 55(3), pages 288-304, December.
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    1. repec:ces:ifodic:v:8:y:2010:i:2:p:14566980 is not listed on IDEAS
    2. Heikki Oksanen, 2010. "The Chinese pension system - First results on assessing the reform options," European Economy - Economic Papers 2008 - 2015 412, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. Heikki Oksanen, 2016. "Smoothing Asymmetric Shocks vs. Redistribution in the Euro Area: A Simple Proposal for Dealing with Mistrust in the Euro Area," CESifo Working Paper Series 5817, CESifo Group Munich.
    4. Oksanen, Heikki, 2014. "Public finance sustainability gap and raising the retirement age, abstract and full summary," Research Reports 177, VATT Institute for Economic Research.
    5. Heikki Oksanen, 2009. "Setting targets for government budgets in the pursuit of intergenerational equity," European Economy - Economic Papers 2008 - 2015 358, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

    More about this item

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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