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Like in many other OECD countries, the population will age rapidly in Germany during the next decades. This undermines … the demographic transition in Germany. Given the current unfunded pension system, the model first calculates a baseline …
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We model the optimal reaction of a public PAYG pension system to demographic shocks. We compare the ex-ante first best and second best solution of a Ramsey planner with full commitment to the outcome under simple third best rules that mimic the pension systems observed in the real world. The...
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