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Pension Reform, Financial Market Development, and Economic Growth: Preliminary Evidence from Chile


  • Robert Holzmann

    (International Monetary Fund)


The Chilean pension reform of 1981, a shift from an unfunded to a funded scheme, is considered to have contributed to this country's excellent economic performance. Positive growth effects allow, in principle, a Pareto-improving shift in pension financing. This paper highlights the theoretical underpinnings of the reform and presents empirical data and preliminary econometric testing of the conjectured reform effects on financial market developments, as well as the impact on total factor productivity, capital formation, and private saving. The empirical evidence is consistent with most but not all claims. In particular, the direct impact of the reform on saving was low, and initially even negative.

Suggested Citation

  • Robert Holzmann, 1997. "Pension Reform, Financial Market Development, and Economic Growth: Preliminary Evidence from Chile," IMF Staff Papers, Palgrave Macmillan, vol. 44(2), pages 149-178, June.
  • Handle: RePEc:pal:imfstp:v:44:y:1997:i:2:p:149-178

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    References listed on IDEAS

    1. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    2. Carmen M. Reinhart & Vincent R. Reinhart, 1991. "Output Fluctuations and Monetary Shocks: Evidence from Colombia," IMF Staff Papers, Palgrave Macmillan, vol. 38(4), pages 705-735, December.
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    6. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
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    9. Helpman, Elhanan & Razin, Assaf, 1987. "Exchange Rate Management: Intertemporal Tradeoffs," American Economic Review, American Economic Association, vol. 77(1), pages 107-123, March.
    10. Reinhart, Carmen & Reinhart, Vincent, 1991. "Output Fluctuations and Monetary Shocks: Evidence from Colombia," MPRA Paper 6980, University Library of Munich, Germany.
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    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean


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