Pensions, Price Shocks, and Macroeconomic Stability in Transition Economies: Illustrations from Belarus

30 Pages Posted: 15 Feb 2006

See all articles by Ehtisham Ahmad

Ehtisham Ahmad

International Monetary Fund (IMF)

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department

Jean-Luc Schneider

affiliation not provided to SSRN

Date Written: May 1994

Abstract

In many countries of the former Soviet Union, pensioners form a large and vulnerable group of the population, with pensions fixed in nominal terms. Attempts to "protect" this group have included a revaluation of benefits for retirees and the introduction of indexation arrangements based on recent wage and price growth. In this paper, lagged indexation arrangements are shown to have large destabilizing effects that can potentially jeopardize the macroeconomic adjustment effort, particularly as inflation begins to decelerate. Some long-term problems relating to the aging of the population and associated policies are also discussed. Illustrative examples from Belarus are presented.

JEL Classification: H55, J14, E31, P2

Suggested Citation

Ahmad, Ehtisham and Mourmouras, Alexandros and Schneider, Jean-Luc, Pensions, Price Shocks, and Macroeconomic Stability in Transition Economies: Illustrations from Belarus (May 1994). IMF Working Paper No. 94/52, Available at SSRN: https://ssrn.com/abstract=883519

Ehtisham Ahmad (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Room 5-311
Washington, DC 20431
United States
202-623-5402 (Phone)
202-589-5402 (Fax)

Jean-Luc Schneider

affiliation not provided to SSRN

No Address Available

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