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Macroeconomic Effects of Pension Reform in Russia

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  • David Hauner

Abstract

Putting the pension system on a sustainable footing arguably remains the biggest challenge in Russia's economic policies. The debate about the policy options was hitherto constrained by the absence of general equilibrium analysis. This paper fills this gap by simulating their macroeconomic effects in a DSGE model calibrated to Russia's economy-the first of its kind to the best of our knowledge. The results suggest that a minimum benefit level in the public system should optimally be financed through lower government consumption, while higher taxation of labor and capital should be avoided. Reducing public investment spending is superior to increasing consumption taxes unless investment generates high rates of return.

Suggested Citation

  • David Hauner, 2008. "Macroeconomic Effects of Pension Reform in Russia," IMF Working Papers 08/201, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:08/201
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    References listed on IDEAS

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    1. Douglas Laxton & Michael Kumhof, 2007. "A Party without a Hangover? On the Effects of U.S. Government Deficits," IMF Working Papers 07/202, International Monetary Fund.
    2. Wang, Yan & Xu, Dianqing & Wang, Zhi & Zhai, Fan, 2004. "Options and impact of China's pension reform: a computable general equilibrium analysis," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 105-127, March.
    3. Willmore, Larry, 2007. "Universal Pensions for Developing Countries," World Development, Elsevier, vol. 35(1), pages 24-51, January.
    4. Selden, Mark & You, Laiyin, 1997. "The reform of social welfare in China," World Development, Elsevier, vol. 25(10), pages 1657-1668, October.
    5. David Hauner, 2007. "Benchmarking the Efficiency of Public Expenditure in the Russian Federation," IMF Working Papers 07/246, International Monetary Fund.
    6. Sinyavskaya, Oxana, 2005. "Pension Reform in Russia: A Challenge of Low Pension Age," Discussion Paper 267, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    7. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
    8. E. Gurvich., 2007. "Prospects for the Russia’s Pension System," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 9.
    9. Hauner, David, 2008. "Explaining Differences in Public Sector Efficiency: Evidence from Russia's Regions," World Development, Elsevier, vol. 36(10), pages 1745-1765, October.
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    Cited by:

    1. Klapper, Leora & Panos, Georgios A., 2011. "Financial literacy and retirement planning: the Russian case," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 599-618, October.
    2. International Monetary Fund, 2011. "Russian Federation; Selected Issues Paper," IMF Staff Country Reports 11/295, International Monetary Fund.
    3. repec:eee:joecag:v:9:y:2017:i:c:p:185-207 is not listed on IDEAS
    4. Daria V Zakharova & Charleen A Gust, 2012. "Strengthening Russia's Fiscal Framework," IMF Working Papers 12/76, International Monetary Fund.
    5. Frank Eich & Mauricio Soto & Charleen A Gust, 2012. "Reforming the Public Pension System in the Russian Federation," IMF Working Papers 12/201, International Monetary Fund.
    6. Montserrat Pallares-Miralles & Carolina Romero & Edward Whitehouse, 2012. "A Worldwide Overview of Facts and Figures," World Bank Other Operational Studies 11891, The World Bank.
    7. Çagaçan Deger, 2008. "Pension Reform in an OLG Model with Multiple Social Security Systems," ERC Working Papers 0805, ERC - Economic Research Center, Middle East Technical University, revised Oct 2008.

    More about this item

    Keywords

    Economic reforms; Consumption taxes; Aging; Public investment; Russian Federation; Pensions; Population; Private savings; Tax policy; Value added tax; Russia; pension reform; DSGE models.; pension; replacement rate; retirement; private pension; retirement age; DSGE models;

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