Pension reform, economic growth and financial development - an empirical study
Pension reform is one of the biggest challenges facing national governments. How toreform the old pay-as-you-go (PAYG) systems is still under hot debate; one of themost influential funded pension schemes is designed by the World Bank. In thesecond chapter of this paper, we first review the arguments for and against the PAYGand then critically discuss the World Bank model by drawing on related literature.The third chapter of this paper presents our empirical results. Regarding the linkbetween economic growth and pension reform towards World Bank model, our panelestimation suggests a negative relationship in the short run and positive relationship inthe long run, although the results for OECD countries are not very statistically robust.The second empirical work is focused on pension fund assets and economic growth. Apositive link between these two variables is found by our standard economic growthspecifications; in addition, there is evidence that pensions are a good predictor ofeconomic growth. This result is then consolidated by our Panel Granger causality test.The last empirical work deals with the relationship between pension assets andfinancial development. On balance, our Panel correction model and Panel Grangercausality test suggest that pension funds growth leads financial development, althoughsome sub-group estimations are not strong. In addition, there is evidence thattraditional banking industry is declining relative to other financial institutions, but not,even increasing relative to the economy.
Year of publication: |
2005
|
---|---|
Authors: | Hu, Y-W |
Publisher: |
Brunel University |
Subject: | Pension reform | Pension fund assets | Pay-as-you-go | Panel error | correction model | Granger causality test |
Saved in:
freely available
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