Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/229010 
Year of Publication: 
2020
Series/Report no.: 
ECB Working Paper No. 2396
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Several European countries are currently considering reversing parts of their pension reforms that were adopted previously to improve sustainability. In this paper we present a framework that allows us to quantify the macroeconomic and fiscal costs of such reversals. We thereby integrate the country-specific information from the latest Ageing Report into a dynamic general equilibrium model with overlapping generations. Focusing on Germany and Slovakia as country cases, our model replicates the Ageing Report's pension expenditure projections very well. We calculate the macroeconomic impact of first the additional pension reforms needed to contain the public debt pressures arising from population ageing and second the costs of reform reversals. Our model results show that undoing past pension reforms would generate substantial adverse macroeconomic costs and could pose challenges for fiscal sustainability.
Subjects: 
public pension
reform reversals
population ageing
overlapping generations model
Ageing Report
JEL: 
H55
J11
J26
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4039-9
Document Type: 
Working Paper

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