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How to Pay for the Crisis or Macroeconomic implications of pension reform

Author

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  • Ray Barrell

    ()

  • Dr Ian Hurst

    ()

  • Simon Kirby

    ()

Abstract

The national debt stock of the UK is rising sharply as a result of the economic crisis, and equilibrium output is falling, with the capital stock contracting. Both problems could be alleviated by the rapid introduction (but slow implementation) of a policy to extend working lives. The paper analyses a delayed extension of working lives in the UK. A distinction is drawn between the impacts of these changes on output (GDP) and income (GNP) in open economies with capital mobility. Increasing working lives will in equilibrium raise consumption and tax revenues and reduce pension spending. These gains by the government can be used to improve services, cut taxes or pay off debts.

Suggested Citation

  • Ray Barrell & Dr Ian Hurst & Simon Kirby, 2009. "How to Pay for the Crisis or Macroeconomic implications of pension reform," National Institute of Economic and Social Research (NIESR) Discussion Papers 333, National Institute of Economic and Social Research.
  • Handle: RePEc:nsr:niesrd:2274
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    File URL: http://www.niesr.ac.uk/sites/default/files/publications/dp333.pdf
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    References listed on IDEAS

    as
    1. Ray Barrell & Simon Kirby, 2009. "Fiscal Sustainability," National Institute Economic Review, National Institute of Economic and Social Research, vol. 208(1), pages 61-65, April.
    2. James Sefton & Justin vandeVen & Martin Weale, 2008. "Means Testing Retirement Benefits: fostering equity or discouraging savings?," Economic Journal, Royal Economic Society, vol. 118(528), pages 556-590, April.
    3. Helen Robinson, 2003. "Are you experienced? British evidence on age-earnings profiles," Applied Economics, Taylor & Francis Journals, vol. 35(9), pages 1101-1115.
    4. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, August.
    5. Ray Barrell & Karen Dury, 2003. "Asymmetric Labour Markets in a Converging Europe: Do Differences Matter?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 183(1), pages 56-65, January.
    6. Barrell, R. & Hall, S.G. & Hurst, I., 2006. "Evaluating policy feedback rules using the joint density function of a stochastic model," Economics Letters, Elsevier, vol. 93(1), pages 1-5, October.
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    Citations

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    Cited by:

    1. Torben M. Andersen, 2011. "The Employment and Fiscal Crisis," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(2), pages 50-54, July.
    2. Bergin, Adele & Conefrey, Thomas & FitzGerald, John & Kearney, Ide, 2010. "Recovery Scenarios for Ireland: An Update," Forecasting Report, Economic and Social Research Institute (ESRI), number jacb201051.
    3. Ray Barrell & Martin Weale, 2010. "Fiscal policy, fairness between generations, and national saving," Oxford Review of Economic Policy, Oxford University Press, vol. 26(1), pages 87-116, Spring.
    4. Aida Caldera Sánchez & Alain de Serres & Naomitsu Yashiro, 2017. "Reforming in a Difficult Macroeconomic Context: A Review of Issues and Recent Literature," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-41, February.
    5. Rossana Merola & Douglas Sutherland, 2013. "Fiscal Consolidation and the Implications of Social Spending for Long-Term Fiscal Sustainability," Review of Economics and Institutions, Università di Perugia, vol. 4(3).
    6. Stephen Cecchetti & Madhusudan Mohanty & Fabrizio Zampolli, 2010. "The future of public debt: prospects and implications," BIS Working Papers 300, Bank for International Settlements.
    7. Fong Joelle H., 2017. "Extending Demographic Windows of Opportunity: Evidence from Asia," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 11(1), pages 1-23, January.
    8. Torben M. Andersen, 2011. "The Employment and Fiscal Crisis," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(02), pages 50-54, July.
    9. MLADEN, Luise, 2012. "Pension Reforms In Central And Eastern European Countries And Their Outcomes," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 3(1), pages 59-68.
    10. Mundle, Sudipto & M.Govinda Rao & Bhanumurthy, N.R., 2011. "Stimulus, Recovery and Exit Policy G20 Experience and Indian Strategy," Working Papers 11/85, National Institute of Public Finance and Policy.

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