Assessing Pension System Reforms in Latin America

During the 1980s and 1990s sweeping structural changes were made to social security systems in a number of Latin American countries. This paper aims to assess the impact of those reforms, showing their possible limitations, risks and internal malfunctions. The impact on the following will be considered: (a) coverage; (b) risks and uncertainty; (c) redistributive aspects; (d) savings; and (e) the administration and management costs of the new system.     

A macro‐financial analysis of pension system reforms in emerging Europe: The performance of IRAs and policy lessons for Serbia

The article explores the initial macro‐financial performance of partial pension system “privatizations”— involving privately‐managed individual retirement savings accounts (IRAs) — undertaken in many emerging European countries. Using empirical data for a period of close to a decade, the evidence shows that returns on privately‐managed IRAs have been below the implicit rate of return of public pay‐as‐you‐go (PAYG) systems. High operating costs and undeveloped capital markets are identified as major contributing factors to the failure of privately‐managed IRAs to meet reform expectations. In light of empirical evidence, Serbia is advised to focus on parametric PAYG reforms and to avoid reforms that involve the partial “privatization” of the pension system.     

Pension reform, the stock market, capital formation and economic growth: A critical commentary on the World Bank's proposals

Proposing far-reaching reforms to pension systems, the World Bank has recently suggested that the existing pay-as-you-go systems in many rich as well as poor countries should be replaced by fully funded, mandatory, preferably private pensions, as the main pillars of the new system. It argues that these reforms will not only benefit pensioners but also enhance savings, and promote capital formation and economic development. This paper provides a critical examination of the Bank's theses and concludes that it has adopted a one-sided view of the relationships between the key critical variables. The proposed reform may therefore neither protect the old nor achieve faster economic growth.     

Developing countries and systemic pension reforms: Reflections on some emerging problems

Since 1981 close to forty countries have introduced systemic pension reforms that have replaced all or part of prior pay‐as‐you‐go (PAYG) schemes with privately managed funded defined contribution (FDC) pillars or systems. However, over the past decade about half of these countries have subsequently cutback on, or entirely eliminated, these FDC schemes. In this article we explore some of the reasons why this reversal is often taking place in developing countries. As part of our analysis we propose a new pension reform typology that goes beyond the commonly used dichotomy between PAYG and pension privatization. We identify and discuss four factors that are of particular relevance to those seeking to understand the pension policy reversals that have been taking place in many developing countries: low pension coverage and incentive incompatibility, triple burden costs, tradeoffs between pension reforms and social pensions, and difficulties with annuitization.     

Differences in wage determination in the Eurozone: A challenge to the resilience of the common currency

Different developments in wages and unit labor costs across countries can reduce the synchronization of business cycles within a currency area and therefore be a potential source of asymmetric shocks and/or asymmetric response to a common shock. In this paper, we use novel econometric methods to identify differences and similarities in wage determination across Eurozone countries. Results show that wages have different determinants across euro area countries, among which two relatively distinct groups can be identified. In particular, wages in Germany, Austria, Belgium, Luxembourg, the Netherlands and Finland behave more similarly, are less sticky and respond more to macroeconomic conditions than those in the group composed of Italy, Spain, Portugal, France and Ireland. Moreover, the equilibrium wage has been affected by a structural change contemporaneous to the international financial crisis. Finally, structural reforms since the euro crisis have contributed to make labor market structures in Eurozone countries more similar, which contributed to improve the resilience of the Eurozone, but the job is not completed yet.     

A model of the inflationary process in six major O.E.C.D. economies: Empirical results and policy implications

In contrast to most recent empirical work on inflation which has concentrated on the size and stability of coefficients in the wage equation, this paper provides a reexamination of the price equation. Evidence is presented on the structural determinants of inflation in six large industrial nations. It is demonstrated that price equations which include capital costs and excess demand among the regressors perform exceedingly well according to the usual statistical criteria. The results of this study indicate that the inflationary process possesses a high degree of uniformity among the larger industrial countries. This pertains not only with respect to the specific independent variables in price equations, but also with respect to the high degree of uniformity of the estimated coefficients. Additionally, the findings indicate that lower productivity growth and higher capital costs have contributed significantly to the inflationary process since 1974. Furthermore, since higher capital costs are one consequence of tighter monetary policies, the adoption of such policies in response to the two oil price shocks of the 1970s may have offset their intended deflationary effects on prices through the linkage of wage costs and aggregate demand.     

Pension reform in the Baltic States: Convergence with “Europe” or with “the world”?

Abstract The Baltic States – Estonia, Latvia and Lithuania – join the European Union in 2004. This paper examines pension reform in the three countries over the past decade in the light of the “European social model” and the “World Bank model”. Part one seeks to define these two models. It shows how the former emphasizes income adequacy and solidarity while the latter stresses fiscal sustainability, savings and economic growth. Part two looks at reforms made and proposed. Initial reforms involved raising the retirement age and relating benefits more closely to earnings and service. This resulted in the establishment of pension systems similar to those in many European countries. Subsequent reforms involved attempts to shift from a publicly financed, purely “pay‐as‐you‐go” system to one based upon “funding” and private, individual accounts. Such systems have been promoted by the World Bank. The appropriateness of this approach – its high transition costs, potentially high administration costs, and longer‐term implications for the relative income status of retired people – is questioned. Part three draws conclusions. In the short and medium term, policymaker should safeguard income adequacy rather than seek the doubtful advantages of funding – in other words, look more to “Europe” than to “the world”.     

Fiscal consolidation in the euro area: How much pain can structural reforms ease?

The IMF's Global Integrated Monetary and Fiscal model (GIMF) is used to examine the scope for structural reforms in the euro area to offset the negative impact of fiscal consolidation required to put public debt back on a sustainable path. The results suggest that structural reforms in core countries could be expected to offset the near-term negative impact on activity arising from the required fiscal consolidation. However, for the periphery, the results suggest that it would take several years before structural reforms could return the level of output back to its pre-consolidation path.     

The experience of the EEC Eurolink Project in modeling bilateral trade linkage equations

Following the basic philosophical approach of the LINK Project, which links various national econometric models built in different countries, the Commission of the European Communities has succeeded in linking the full-size quarterly econometric models of the four major European countries. The Eurolink Project is being extended to cover the other EEC countries as well as the United States, Canada, and Japan. The results reported in this paper are part of this larger project which attempts to link the EEC member economies in a trade and capital flows econometric model and explain the transmission of interdependent economic fluctuations from country to country. In the present study, the interconnection between the various economies is represented by bilateral trade flows only. Flows of invisibles and of financial capital are not completely studied and are not yet ready to be included in this report.The theoretical structural model with its bilateral trade supply and demand functions and the technique employed for the construction of bilateral import and export price indices are presented. Estimation results are shown and discussed with emphasis on their use for the analysis of international trade and for policy decision making.     

Structural reform of social security pensions in Latin America: Models, characteristics, results and conclusions

The structural reform of social security pensions is the subject of international debate, and Latin America has been a pioneer of such reform. The region has gathered experience over two decades, and had an important influence on other regions. This article gathers legal and statistical data about reform in ten countries of Latin America, in order (1) to analyse the three distinct general models followed and note the characteristics of the reforms in the different countries; (2) to evaluate the performance of the reforms against nine conventional assumptions about its effects; (3) to draw useful lessons from these reforms for the region and other countries.     

善耆与清末新政——以20世纪初十年的北京新政改革为视点

肃亲王善耆在世的年代,正值清王朝国势陵替,大厦将倾。为维护王朝的统治,善耆雷厉风行,大胆任用新人,举办了诸多新政,如整顿京师巡警、制定报律及出版律、筹办京师自治等。这些措施一定程度上表达了革新人士的诉求和时代发展的意愿,对京师建设和新政事业做出了一定贡献。     

前车之覆 后车之鉴——对苏东前社会主义国家改革失败原因与教训的再认识

苏东前社会主义国家的改革前后经历40余年,出现了三次浪潮,在取得巨大成就的同时却犯下了严重错误,最终走向失败.这主要是由于其实行了错误的改革路线,党内特权、腐败现象也导致了民心丧失,最终使改革失去了群众基础,同时也是西方敌对势力推行"和平演变"战略的结果.现有社会主义国家尤其是我们中国要吸取其教训,从改革的指导思想、策略原则、和谐环境构建等方面取得突破,确保改革顺利进行.     

How Slovakia has kept the confidence fairy

Since its creation as a country in 1993, Slovakia's average real growth rate has been not only the highest among Eurozone countries, it has been the highest in the European Union. And unlike most “peripheral” Eurozone countries, most recently (March/April, 2013) Cyprus and Slovenia, it has not suffered from significant capital flight. We provide some clues as to why this is so. In contrast to many of the post-1989 Central and Eastern European (CEE) “transition” economies, as well as the troubled five “GIPSI” countries (Greece, Ireland, Portugal, Spain and Italy), Slovakia has kept unit costs competitive, fostered a sound banking system, and managed its monetary and fiscal policy responsibly. Both public and private debt is relatively low and largely funded from internal savings. In short, Slovakia offers lessons for many CEE countries as well as Eurozone countries struggling to restore internal and external balance.     

联合国安理会改革及其发展趋势

作为典型的开放系统的联合国安理会,其改革已经取得了一些成就,但其实质性改革受到它原有权力结构与外界环境因素的制约。根据2004年12月联合国名人小组改革报告和联合国秘书长安南于2005年3月向第59届联大提交的改革报告中关于否决权、扩充安理会两方案和侯选国标准三个问题的有关内容,以及现任常任理事国、主要候选国、中等发达国家和地区性大国对报告的几项建议的态度,安理会进行第二次正式调整具有可行性。     

An essay on the agricultural production organization in former communist countries

This paper reviews and interprets existing information and transaction costs theories of firm organization and entrepreneur’s role in order to provide a consistent explanation of the farm-sector dynamics in former communist countries. Important determinants of farm restructuring are economic factors, such as relative productivity of existing human and physical capital in different organizations, risk, terms of trade, transition specific distortions, and factor intensity of agricultural production. To a large extent, however, the phenomenon of various new enterprises being established represents not just general economic and policy conditions but also a diverse population of economic agents.     

German family policy at the crossroads: analysing the impact of parental leave reform through simulation

Comparative studies of welfare reforms encounter two problems. First, the counterfactual problem is that in the real world schemes and their reforms do not coexist simultaneously and are hard to compare. Second, the contextual problem derives from the absence of comparable measures for change. Microsimulation helps to overcome these problems. It compares policy options – actual reforms or reform plans – simultaneously and provides a comparable measure: the disposable income of model families. This article uses a type–case approach to investigate recent reforms of the German parental leave benefit. Simulation makes those reforms comparable over time and across countries. Results show that the profile of the German scheme is changing from 'general family' towards 'dual-earner' support. Furthermore, the recent reforms make the German scheme converge towards the Swedish leave scheme. The recent reforms introduce a new concept of fairness and a focus on gender equality to German family policies.     

German family policy at the crossroads: analysing the impact of parental leave reform through simulation

Comparative studies of welfare reforms encounter two problems. First, the counterfactual problem is that in the real world schemes and their reforms do not coexist simultaneously and are hard to compare. Second, the contextual problem derives from the absence of comparable measures for change. Microsimulation helps to overcome these problems. It compares policy options – actual reforms or reform plans – simultaneously and provides a comparable measure: the disposable income of model families. This article uses a type–case approach to investigate recent reforms of the German parental leave benefit. Simulation makes those reforms comparable over time and across countries. Results show that the profile of the German scheme is changing from 'general family' towards 'dual-earner' support. Furthermore, the recent reforms make the German scheme converge towards the Swedish leave scheme. The recent reforms introduce a new concept of fairness and a focus on gender equality to German family policies.     

The impact of population aging in rich countries: What’s the future?

The paper examines the impact of population ageing on macroeconomic outcomes, inflation and labour force participation employing a sample of 23 OECD developed countries from 1960 to 2014 and accounting for the institutional context. Controlling for collective bargaining coordination the results show that a larger elderly share of population would lead to lower real GDP growth, albeit mostly in countries with low population growth rates. Ageing puts substantial downward pressure on inflation due to subdued aggregate demand. Also, results demonstrate that the ageing of the workforce tends to reduce labour supply. To mitigate any adverse effects of population ageing, a combination of labour market policies, pension reforms, greater investment in human capital and technological innovation should be prioritized in policy making.     

Social insurance schemes in the Gulf countries

Being economically well established, the member countries of the Gulf Cooperation Council have unique social insurance schemes. Based on the defined benefit principle, they have succeeded in creating large reserves, which are managed and invested independently by the social insurance institutions. However, the schemes are facing a continuous escalation in their costs, due to their generosity rather than the population ageing observed in industrialized countries. This trend may well support the argument that the schemes in the region can cope with conventional reforms like increasing contribution rates, raising retirement age and restricting early retirement, rather than switching to a defined contribution system.     

Economic reform when institutional quality is weak: The case of the Maghreb

Institutional improvement can be a very slow and uncertain process when institutional quality is weak. In the meantime, countries have launched far-reaching economic reforms whose success is predicated on a large investment response. However, the uncertainties attending institutional reform can raise perceptions of risk, thereby muting investment responses. Using new values of institutional quality for three Maghreb countries (Algeria, Morocco and Tunisia), which we derive from fuzzy-set based transformations on freedom indices, we show that moving from low institutional quality to a stage of ‘partial improvement’ may reduce income per capita, with financial and trade reforms having unintended negative effects.