IDEAS home Printed from https://ideas.repec.org/p/del/abcdef/2003-12.html

Why should the portfolios of mandatory private pension funds be captive? (the foreign investment question)

Author

Listed:
  • Georges de Menil

Abstract

Should the portfolios of mandatory, private pension funds in developing countries be invested exclusively in the home country? Or should their managers be free to make prudent investments anywhere in the world? Traditional portfolio analysis gives a clear answer from the point of view of the beneficiaries of the funds: Lifting geographic restraints expands the risk-reward frontier, and unequivocally enhances their welfare. However, if the balance of payments is constrained, capital outflows must be offset by compensating inflows. We assume that, when pension funds purchase foreign securities, the State is constrained to borrow an equal amount on international markets. We then use a simple model to analyze the resulting trade-offs. Chile, Argentina, Poland and Kazakhstan provide concrete examples of some of the issues discussed.

Suggested Citation

  • Georges de Menil, 2003. "Why should the portfolios of mandatory private pension funds be captive? (the foreign investment question)," DELTA Working Papers 2003-12, DELTA (Ecole normale supérieure).
    • Handle: RePEc:del:abcdef:2003-12
    as

    Download full text from publisher

    File URL: http://www.delta.ens.fr/abstracts/wp200312.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Cristian Escudero & José L. Ruiz, 2021. "Life insurance companies’ investment abroad and the internal rate of return on Chilean annuities," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(4), pages 688-709, October.
    3. Mei-Ling Tang & Ting-Pin Wu & Ming-Chin Hung, 2022. "Optimal Pension Fund Management with Foreign Investment in a Stochastic Environment," Mathematics, MDPI, vol. 10(14), pages 1-21, July.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:del:abcdef:2003-12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge The email address of this maintainer does not seem to be valid anymore. Please ask the person in charge to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/deltafr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.