Pension reform, capital markets, and the rate of return


Börsch-Supan, Axel ; Heiss, Florian ; Ludwig, Alexander ; Winter, Joachim


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URL: https://ub-madoc.bib.uni-mannheim.de/307
URN: urn:nbn:de:bsz:180-madoc-3074
Document Type: Working paper
Year of publication: 2002
The title of a journal, publication series: MEA Discussion Papers
Volume: 023
Place of publication: Mannheim
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Veröffentlichungen des MEA (Mannheim Research Institute For the Economics of Aging) > MEA Discussion Papers
Subject: 330 Economics
Subject headings (SWD): Rentenreform , Altern , Kapitalmarkt , Kapitalertrag
Abstract: This paper discusses the consequences of population aging and a fundamental pen- sion reform – that is, a shift towards more pre-funding – for capital markets in Germany. We use a stylized closed-economy, overlapping-generations model to compare the effects of the recent German pension reform with those of a more decisive reform that would freeze the cur- rent pay-as-you-go contribution rate and thus result in a larger funded component of the pen- sion system. We predict rates of return to capital under both reform scenarios over a long ho- rizon, taking demographic projections as given. Our main finding is that the future decrease in the rate of return is much smaller than often claimed in the public debate. Our simulations show that the capital stock will decrease once the baby boom generations enter retirement even if there were no fundamental pension reform. The corresponding decrease in the rate of return, the direct effect of population aging, is around 0.7 percentage points. While the capital market effects of the recent German pension reform are marginal, the rate of return to capital would decrease by an additional 0.5 percentage points under the more decisive reform pro- posal.

Dieser Eintrag ist Teil der Universitätsbibliographie.

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Börsch-Supan, Axel ; Heiss, Florian ; Ludwig, Alexander ; Winter, Joachim (2002) Pension reform, capital markets, and the rate of return. Open Access MEA Discussion Papers Mannheim 023 [Working paper]
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