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Disparities in pension systems and financial flows among European countries

Published online by Cambridge University Press:  24 April 2008

JEAN CHATEAU ,
XAVIER CHOJNICKI  and
RICCARDO MAGNANI
JEAN CHATEAU
Affiliation:
OECD, France
XAVIER CHOJNICKI*
Affiliation:
EQUIPPE, University of Lille 2, and Cepii, France (e-mail: xavier.chojnicki@univ-lille2.fr)
RICCARDO MAGNANI
Affiliation:
Cepii, France
*
*Corresponding author.
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Abstract

We present a quantitative analysis of the impact of differential ageing and pension reforms on capital and labor market and, in particular, on intra-European capital flows. To this end, we develop a stylized general equilibrium model with overlapping generations of heterogeneous agents for the three largest European countries: France, Germany and the United Kingdom. The model presents a structure halfway between pure general equilibrium models with rigorous microeconomic foundations and accounting models where the macroeconomic environment remains exogenous. We show that the dynamics of capital accumulation and pension system sustainability are totally different depending on the assumption concerning economic openness. Finally, in the long run, resorting to debt financing seems to be a dead end to finance retirement systems.

Type
Articles
Information
Journal of Pension Economics & Finance , Volume 8 , Issue 1 , January 2009 , pp. 1 - 33
Copyright
Copyright © 2008 Cambridge University Press

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