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Beyond the Toledo agreement: the intergenerational impact of the Spanish Pension Reform

  • Holger Bonin

    ()

    (University of Freiburg, Institute of Public Finance, 79098 Freiburg, Germany Universitat de Barcelona, Facultat d'Economia, Av. Diagonal 690, 08034 Barcelona, Spain)

  • Joan Gil

    ()

    (University of Freiburg, Institute of Public Finance, 79098 Freiburg, Germany Universitat de Barcelona, Facultat d'Economia, Av. Diagonal 690, 08034 Barcelona, Spain)

  • Concepció Patxot

    ()

    (University of Freiburg, Institute of Public Finance, 79098 Freiburg, Germany Universitat de Barcelona, Facultat d'Economia, Av. Diagonal 690, 08034 Barcelona, Spain)

The paper examines the intergenerational impact of the Spanish public pension system after the 1997 Pension Reform Act. Within a Generational Accounting framework, we find that the new legal setting could leave future generations with liabilities as high as 176% of 1996 GDP. Hence, we analyse the impact of alternative reforms. Holding the pay-as-you-go setting, a further improvement to tax-benefit linkage in line with the Toledo Agreement proposals is shown to yield an intergenerationally more balanced outcome, than an increase in the retirement age or an expansion of public subsidies financed through indirect taxes. Finally, a move toward a partially funded pension system which restores the intergenerational balance is simulated.

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Article provided by Springer in its journal Spanish Economic Review.

Volume (Year): 3 (2001)
Issue (Month): 2 ()
Pages: 111-130

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Handle: RePEc:spr:specre:v:3:y:2001:i:2:p:111-130
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  1. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1991. "Generational accounts: a meaningful alternative to deficit accounting," Working Paper 9103, Federal Reserve Bank of Cleveland.
  2. Raffelhuschen, Bernd & Risa, Alf Erling, 1997. " Generational Accounting and Intergenerational Welfare," Public Choice, Springer, vol. 93(1-2), pages 149-63, October.
  3. Sinn, Hans-Werner, 1997. "The Value of Children and Immigrants in a Pay-As-You-Go Pension System: A Proposal For a Partial Transition to a Funded System," CEPR Discussion Papers 1734, C.E.P.R. Discussion Papers.
  4. Homburg, Stefan, 1990. "The Efficiency of Unfunded Pension Schemes," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 640-647.
  5. Willem H. Buiter, 1996. "Generational Accounts, Aggregate Savings, and Intergenerational Distribution," IMF Working Papers 96/76, International Monetary Fund.
  6. Eduardo Berenguer Comas & Holger Bonin & Bernd Raffelhuschen, 1998. "Generational Accounting in Spain: Has public sector grown too much?," Working Papers in Economics 30, Universitat de Barcelona. Espai de Recerca en Economia.
  7. Rafflhuschen, B. & Risa, A.E., 1997. "Generational Accounting and intergenerational Welfare," Norway; Department of Economics, University of Bergen 164, Department of Economics, University of Bergen.
  8. Boll, Stephan & Raffelhuschen, Bernd & Walliser, Jan, 1994. " Social Security and Intergenerational Redistribution: A Generational Accounting Perspective," Public Choice, Springer, vol. 81(1-2), pages 79-100, October.
  9. Holger Bonin & Bernd Raffelhüschen & Jan Walliser, . "Can Immigration Alleviate the Demographic Burden?," EPRU Working Paper Series 99-17, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  10. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1994. "Generational Accounting: A Meaningful Way to Evaluate Fiscal Policy," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 73-94, Winter.
  11. Auerbach, Alan J & Gokhale, Jagadeesh & Kotlikoff, Laurence J, 1992. " Generational Accounting: A New Approach to Understanding the Effects of Fiscal Policy on Saving," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(2), pages 303-18.
  12. Bernd Raffelhüschen, 1993. "Funding social security through Pareto-optimal conversion policies," Journal of Economics, Springer, vol. 7(1), pages 105-131, December.
  13. Lopez-Garcia, Miguel-Angel, 1996. "Consumption and Income as Tax Bases for Social Security," Public Finance = Finances publiques, , vol. 51(1), pages 54-70.
  14. Robert Haveman, 1994. "Should Generational Accounts Replace Public Budgets and Deficits?," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 95-111, Winter.
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