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Pension reform in emerging countries: Simulations on the Tunisian case

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  • Mehdi Ben Braham

Abstract

This paper discusses the impact of aging on the financial equilibrium of the Tunisian retirement system and the macroeconomic implications of reform and introduces capitalized pillars. Using a stylized, closed economy, overlapping generation model to analyze the impact of the introduction of a multi-pillar system combining pay-as-you-go (PAYG) and funded elements (both temporary and permanent funded elements), the analysis is focused, on the one hand, on the saving response to the reform in the aggregate level and, on the other hand, on accumulation and consumption profile per cohort. The reform leads to an important crowding-out effect, limiting the increase of capital accumulation. The simulations show also that the burden of the reform is unequally supported by the different cohorts.

Suggested Citation

  • Mehdi Ben Braham, 2006. "Pension reform in emerging countries: Simulations on the Tunisian case," NFI Working Papers 2006-WP-06, Indiana State University, Scott College of Business, Networks Financial Institute.
  • Handle: RePEc:nfi:nfiwps:2006-wp-06
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    File URL: http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2006-WP-06_Braham.pdf
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    References listed on IDEAS

    as
    1. Axel H. Boersch-Supan & Joachim K. Winter, 2001. "Population Aging, Savings Behavior and Capital Markets," NBER Working Papers 8561, National Bureau of Economic Research, Inc.
    2. Pascal Belan & Philippe Michel & Pierre Pestieau, 1998. "Pareto-Improving Social Security Reform," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 23(2), pages 119-125, December.
    3. Martin Feldstein, 1998. "Introduction to "Privatizing Social Security"," NBER Chapters,in: Privatizing Social Security, pages 1-29 National Bureau of Economic Research, Inc.
    4. Didier Blanchet, 1992. "Retraites et croissance à long terme. Un essai de simulation," Économie et Prévision, Programme National Persée, vol. 105(4), pages 1-16.
    5. Axel Boersch-Supan & Florian Heiss & Alexander Ludwig & Joachim Winter, 2003. "Pension Reform, Capital Markets and the Rate of Return," German Economic Review, Verein für Socialpolitik, vol. 4(2), pages 151-181, May.
    6. Catalan, Mario & Impavido, Gregorio & Musalem, Alberto R., 2000. "Contractual savings or stock market development - Which leads?," Policy Research Working Paper Series 2421, The World Bank.
    7. Martin Feldstein & Andrew Samwick, 1998. "The Transition Path in Privatizing Social Security," NBER Chapters,in: Privatizing Social Security, pages 215-264 National Bureau of Economic Research, Inc.
    8. Martin Feldstein, 1998. "Privatizing Social Security," NBER Books, National Bureau of Economic Research, Inc, number feld98-1, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Aging; pension reform; saving;

    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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