Demographics, Pension Systems and the Saving-Investment Balance

December 7, 2018

Preview Citation

Format: Chicago

Hua Chai, and Jun I Kim. Demographics, Pension Systems and the Saving-Investment Balance, (USA: International Monetary Fund, 2018) accessed September 26, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper studies the effect of demographic change on national saving, global interest rates, and international capital flows, focusing on the role of the public pension system. We develop a small open economy overlapping generations model to illustrate the channels through which demographic variables and pension system generosity interact to affect both private and public saving behavior. We then extend this framework to a two-country setting and simulate scenarios of demographic change and pension reform. We find that the generosity of the pension system plays an important role in determining the movement of the global interest rate and patterns of international capital flows.

Subject: Aging, Expenditure, Health, Labor, National accounts, Pension spending, Pensions, Population and demographics, Private savings

Keywords: Aging, Current account, Demographics, Global, Investment, OLG model, Pension, Pension generosity, Pension spending, Pensions, Private savings, Public saving, Saving, Saving behavior, Saving increase, Saving rate, Saving side, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/265
Stock No:

WPIEA2018265
ISBN:

9781484385876
ISSN:

1018-5941

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