Abstract
Do Funded Pensions Contribute to Higher Aggregate Savings? A Cross-Country Analysis.—In this paper we test the hypothesis that increases in funded pension wealth contribute to higher aggregate savings by employing a panel data set of ten countries over the 1982–1993 period. We develop a proxy for changes in funded pension wealth for this sample of countries based on pension fund asset data. Using this measure and controlling for other determinants of savings, we estimate the relationship between aggregate saving rates and changes in funded pension wealth. Our results suggest that the build-up of pension assets exerts a positive and statistically significant effect on aggregate saving rates, and that this impact differs for OECD and non-OECD countries. JEL no. E21, G23, O57
Zusammenfassung
Tragen Renten in einem Kapitaldeckungssystem zu einer höheren Ersparnis in der Volkswirtschaft bei? Eine länderübergreifende Analyse.—Die Verfasser prüfen die Hypothese, daß Erhöhungen des Vermögens in einem Rentensystem mit Kapitaldeckung zu einer höheren aggregierten Ersparnis führen und verwenden dafür Paneldaten aus zehn Ländern für die Zeit von 1982 bis 1993. Sie entwickeln einen Näherungswert für Veränderungen des Rentenvermögens in diesen Ländern, der auf Daten über Rentenfonds basiert. Mit Hilfe dieses Maßes und unter Berücksichtigung anderer Determinanten der Ersparnisbildung schätzen sie die Beziehung zwischen der aggregierten Sparquote und den Veränderungen im Rentenvermögen im Falle eines Kapitaldeckungsverfahrens. Ihre Ergebnisse deuten darauf hin, daß die Ansammlung von Rentenvermögen einen positiven und statistisch signifikanten Einfluß auf die aggregierte Sparquote ausübt und daß diese Wirkung unterschiedlich ist, je nachdem ob es sich um OECD-Länder oder um Länder handelt, die nicht der OECD angehören.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Asher, M. G. (1997). Social Security Arrangements in Southeast Asia. Mimeo. National University of Singapore.
Bank Negara Malaysia (various years).Annual Report. Kuala Lumpur.
Blanchard, O. J. and S. Fischer (1989).Lectures on Macroeconomics. Cambridge, MA: MIT Press
Cagan, P. (1965). The Effect of Pension Plans on Aggregate Saving: Evidence from a Sample Survey. NBER Occasional Paper no. 95. Cambridge, Mass.
Carroll, C. and D. Weil (1994). Saving and Growth: A Reinterpretation.Carnegie-Rochester Conference Series on Public Policy 40 (June): 133–197.
Corsetti, G. and K. Schmidt-Hebbel (1996). Pension Reform and Growth. In S. Vald’es-Prieto (ed.),Pensions: Funding, Privatization, and Macroeconomic Policy, Cambridge: Cambridge University Press.
Davis, E. Philip (1995).Pension Funds. Retirement-Income Security and Capital Markets: An International Perspective. Oxford: Clarendon Press.
Department of Statistics, Ministry of Trade and Industry, Singapore (various years).Yearbook of Statistics. Kuala Lumpur.
Diamond, P. A. (1965). National Debt in a Neoclassical Growth Model.American Economic Review 55 (5): 1126–1150.
Edwards, S. (1995). Why are Saving Rates so Different Across Countries?: An International Comparative Analysis. NBER Working Paper no. 5097. Cambridge, Mass.
Espinoza, J. and M. Marcel (1997). Descentralizaci’on Fiscal: El Caso de Chile. Serie Pol’itica Fiscal No. 57. CEPAL.
Faruqee, H. and A. M. Husain (1994). Determinants of Private Saving in Southeast Asia: A Cross-Country Analysis. Southeast Asia and Pacific Department, International Monetary Fund. Washington, D.C., mimeo.
Feldstein, M. (1974). Social Security, Induced Retirement, and Aggregate Capital Accumulation.Journal of Political Economy 82 (5): 905–926.
Gale, W. (1995). The Effects of Pensions on Wealth: A Re-evaluation of Theory and Evidence. Mimeo. The Brookings Institution.
Husain, A. (1995). Determinants of Private Saving in Singapore. In K. Bercuson (ed.),Singapore: A Case Study in Rapid Development, International Monetary Fund Occasional Paper 119. Washington, D.C.
Masson, P., T. Bayoumi and H. Samiei (1995). International Evidence on the Determinants of Private Saving. International Monetary Fund Working Paper 95/51. Washington, D.C.
Modigliani, F. and R. Brumberg (1954). Utility Analysis and the Consumption Function: An Interpretation of Cross-Section Data. In K. Kurihara (ed.),Post-Keynesian Economics, New Brunswick, New Jersey: Rutgers University Press.
Morand’e, F. (1996). Savings in Chile: What Went Right? Inter-American Development Bank Working Paper 322. Washington, D.C.
Munnell, A. (1987). The Impact of Public and Private Pension Schemes on Saving and Capital Formation. In International Social Security Association (ed.),Conjugating Public and Private, the Case of Pensions. Studies and Research 24. Geneva.
Munnell, A. H. and F. O. Yohn (1992). What Is the Impact of Pensions on Saving?. In Z. Bodie and A. H. Munnell (eds.),Pensions and the Economy: Sources, Uses and Limitations of the Data. Pension Research Council of the Wharton School of the University of Pennsylvania.
OECD (Organisation for Economic Co-operation and Development) (1996).Social Expenditure Statistics of OECD Member Countries. Paris: OECD.
OECD (Organisation for Economic Co-operation and Development) (1997a). The Macroeconomics of Ageing, Pensions and Savings: A Survey. ECO/CPE/WP1(97).
— (1997b).Institutional Investors Statistical Yearbook, Paris: OECD.
Reisen, H. (1996). Developing-Country Savings and the Global Capital Shortage. InFuture Global Capital Shortage: Real Threat or Pure Fiction? Paris: OECD.
Samuelson, P. (1958). An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money.Journal of Political Economy 66 (6): 467–482.
Schmidt-Hebbel, K. (1997). Does Pension Reform Really Spur Saving and Growth? Central Bank of Chile. Santiago de Chile, mimeo.
Superintendencia de Administradores de Fondos de Pensiones (SAFP) (1996).The Chilean Pension System. Santiago de Chile: SAFP.
Vittas, D. (1995). Pension Funds and Capital Markets. Financial Sector Development. World Bank. Washington, D.C., mimeo.
World Bank (1994).Averting the Old Age Crisis: Policies to Protect the Old and Promote Growth. Oxford: Oxford University Press.
Additional information
Remark: We would like to thank Robert Holzmann, William Gale, Ken Kletzer, Mike Dooley, Menzie Chinn, Klaus Schmidt-Hebbel, Richard Kohn, S’ebastien Dessus, Monica Queisser, Julia von Maltzan and an anonymous referee for helpful comments and suggestions. Any remaining errors or omissions remain ours.
About this article
Cite this article
Bailliu, J.N., Reisen, H. Do funded pensions contribute to higher aggregate savings? A cross-country analysis. Weltwirtschaftliches Archiv 134, 692–711 (1998). https://doi.org/10.1007/BF02773293
Issue Date:
DOI: https://doi.org/10.1007/BF02773293