Pension Privatization and Country Risk

Cuevas, Alfredo; Gonzalez, Maria de los Angeles; Lombardo, Davide; López-Marmolejo, Arnoldo

doi:10.2139/ssrn.1266528

Cited by 2 publications

(1 citation statement)

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“…In addition, switching from disguised-PAYG financing to the traditional PAYG system reduces public debt and precludes future debt-creation inherent in disguised-PAYG financing, which can, in turn, positively affect the business environment since private investors and capital markets treat public debt less favorably than the implicit pension debt (Cuevas et al, 2008).…”

Section: Dynamic Inefficiency Of Second Pillar Fundsmentioning

confidence: 99%

25 years of averting the old age crisis in Eastern Europe

Altiparmakov¹,

Nedeljković²

2021

Global Social Policy

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The influential World Bank Averting the old-age crisis study profoundly influenced pension policies around the globe, but nowhere more so than in Eastern Europe. While Western Europe dismissed radical carve-out pension privatization initiatives, Eastern European countries with similar Pas-As-You-Go legacies pursued World Bank reforms hoping to increase retirement incomes, spur economic growth, and hedge political risks inherent in public systems. However, 25 years later, reversals are taking place in all reforming countries, ranging from outright dismantling of mandatory private pension funds to their scaling-down and moving to voluntary participation. Empirical evidence presented in this article suggests that carve-out privatization failed to accelerate economic growth, while private pension funds turned out to be dynamically inefficient and inferior to PAYG systems they were intended to replace. We argue that the carve-out approach is the root cause of inherent economic and fiscal tension between public and private pension pillars. We identify a minimum set of Pareto improving reform adjustments that address the most pressing sources of economic inefficiencies and political instability by undoing the carve-out financing. The suggested re-reforms would be a first step in enabling private pension funds in Eastern Europe to become a meaningful supplement to existing PAYG benefits, in line with typical pension practices in Western Europe.

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Section: Dynamic Inefficiency Of Second Pillar Fundsmentioning

confidence: 99%

25 years of averting the old age crisis in Eastern Europe

Altiparmakov¹,

Nedeljković²

2021

Global Social Policy

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The impact of pension fund assets on economic growth in transition countries, emerging economies, and developed countries

Morina

Grima

2022

QFE

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<abstract> <p>In this study, the authors aim to analyze the impact of pension asset investments on the economic growth of selected non-OECD countries, taking into account the controlling effect of gross fixed capital formation, domestic credit to the private sector, inflation, public debt and population. To conduct the econometric analysis in this study, the authors relied on secondary data published in the annual reports of the OECD, the World Bank and the IMF. Based on the econometric results of this study, the authors conclude that the investment of pension fund assets has positively impacted the economic growth of selected non-OECD countries (2002–2018). This study is of scientific importance because it provides detailed empirical evidence regarding the investment of pension funds in international financial markets and the effects of these investments on the economic growth of non-OECD countries. Moreover, the authors of this study through this scientific paper provide new scientific evidence to governments and policymakers in these countries on how to design appropriate strategic investment policies so that pension funds invest their pension assets at a safe rate of return from investments to ensure economic growth and efficiency in the capital markets. Given that most non-OECD countries are emerging and transition economies, the importance of this study lies in the fact that the authors, through empirical findings, highlight the importance of pension fund investments in global financial markets and the effects of these investments on the economic growth of these countries.</p> </abstract>

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Pension Privatization and Country Risk

Cited by 2 publications

References 0 publications

25 years of averting the old age crisis in Eastern Europe

25 years of averting the old age crisis in Eastern Europe

The impact of pension fund assets on economic growth in transition countries, emerging economies, and developed countries

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