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Pension Reform and the Fiscal Policy Stance


  • Philip R. Gerson
  • George A Mackenzie
  • Peter S. Heller
  • Alfredo Cuevas


The increased budget deficit caused by the privatization of a public pension plan does not imply a relaxation of the stance of fiscal policy. The reform's impact on the fiscal stance and national saving depends primarily on its effect on the sum of explicit and implicit public debt and on the post-reform payroll tax and private system contribution rates. However, the precise impact of reform also depends on such influences as the relationship between the rates of interest on implicit and explicit public debt. There may be circumstances in which pension privatization, if not offset by fiscal consolidation, will loosen the fiscal stance.

Suggested Citation

  • Philip R. Gerson & George A Mackenzie & Peter S. Heller & Alfredo Cuevas, 2001. "Pension Reform and the Fiscal Policy Stance," IMF Working Papers 01/214, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:01/214

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    References listed on IDEAS

    1. Peter S. Heller, 1998. "Rethinking Public Pension Reform Initiatives," IMF Working Papers 98/61, International Monetary Fund.
    2. Murphy, Kevin M & Welch, Finis, 1998. "Perspectives on the Social Security Crisis and Proposed Solutions," American Economic Review, American Economic Association, vol. 88(2), pages 142-150, May.
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    Cited by:

    1. Juan Manuel Lima & Johannes Wiegand & Enrique Montes & Carlos Varela, 2006. "Sectoral Balance Sheet Mismatches and Macroeconomic Vulnerabilities in Colombia, 1996-2003," IMF Working Papers 06/5, International Monetary Fund.
    2. David Robalino, 2005. "Pensions in the Middle East and North Africa: Time for Change," World Bank Publications, The World Bank, number 7427, June.
    3. Ondøej Schneider, 2009. "Reforming Pensions in Europe: Economic Fundamentals and Political Factors," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(4), pages 292-308, Oktober.


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