Pension Reform and the Fiscal Policy Stance

16 Pages Posted: 14 Feb 2006

See all articles by George A. (Sandy) Mackenzie

George A. (Sandy) Mackenzie

Independent

Philip Gerson

International Monetary Fund (IMF)

Alfredo Cuevas

International Monetary Fund (IMF)

Peter Heller

International Monetary Fund (IMF)

Date Written: December 2001

Abstract

The increased budget deficit caused by the privatization of a public pension plan does not imply a relaxation of the stance of fiscal policy. The reform's impact on the fiscal stance and national saving depends primarily on its effect on the sum of explicit and implicit public debt and on the post-reform payroll tax and private system contribution rates. However, the precise impact of reform also depends on such influences as the relationship between the rates of interest on implicit and explicit public debt. There may be circumstances in which pension privatization, if not offset by fiscal consolidation, will loosen the fiscal stance.

Keywords: social security, old age pension, pension reform, fiscal balance

JEL Classification: H550, H561, H562, H621

Suggested Citation

Mackenzie, George A. (Sandy) and Gerson, Philip and Cuevas, Alfredo and Heller, Peter, Pension Reform and the Fiscal Policy Stance (December 2001). IMF Working Paper No. 01/214, Available at SSRN: https://ssrn.com/abstract=880891

Philip Gerson (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Alfredo Cuevas

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Peter Heller

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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