The ‘fully funded countries’ will eventually share in the costs of ageing in the ‘PAYG countries’, particularly if these countries are using government debt to finance the long-term costs of ageing. This is the conclusion of the Dutch economist Yvonne Adema in the thesis she will be defending at Tilburg University, the Netherlands, on 30 May. She also recommends that decisions on pension reforms should be made at the European level.
During the next few decades, many western countries will be confronted with an ageing population. However, the economic effects will vary from country to country. Yvonne Adema has carried out pioneering scientific research into how countries operating different pension systems, and therefore showing different saving reactions to this phenomenon, influence each other via capital markets. The various member states will inevitably feel the consequences of the way in which other countries have organized their pension systems or the pension reforms implemented in response to the problem of ageing. The effects will particularly be felt in Europe, where the countries using the Euro already have a fully integrated capital market.
Countries like the Netherlands with an extensive fully funded pension system, whereby people save for their retirement, will ultimately be faced with the problems of the countries in the Economic and Monetary Union (EMU) that operate a PAYG system. According to Adema’s analysis, this is because the savings in ‘fully funded countries’ rise more steeply in response to ageing than in countries with a PAYG system such as Italy and Germany. On balance, the result will be a capital flow into these latter countries. Moreover, the cost of pensions in ‘PAYG countries’, where the working population finances the pensions of the older citizens, will rise sharply as the number of pensioners increases relative to the number of people in the workforce. If these countries then use government debt to cover the cost of the ageing population, the 'fully funded countries’ will find themselves facing some of the costs. If the government debt is very high, this can lead to inflation with direct implications for the rest of the common capital market.
According to Adema, it is therefore vital that all countries in the EMU comply with the Stability and Growth Pact. It is also important that the European Central Bank is independent, credible and transparent.Reform is not always the answer
Yvonne Adema (1979, Meppel) studied economics at the University of Groningen, the Netherlands (passing cum laude) and conducted her PhD research at the CentER Graduate School in the Faculty of Economics and Business in Tilburg. She specializes in public economics, international and monetary economics. Since October 2007, she has been working as a postdoctoral researcher for the Economics Department at Tilburg University and Netspar, the Network for Studies on Pensions, Aging and Retirement. She is also affiliated to the Netherlands Bureau for Economic Policy Analysis.
Corine Schouten | alfa
Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik
RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung
The more electronics steer, accelerate and brake cars, the more important it is to protect them against cyber-attacks. That is why 15 partners from industry and academia will work together over the next three years on new approaches to IT security in self-driving cars. The joint project goes by the name Security For Connected, Autonomous Cars (SecForCARs) and has funding of €7.2 million from the German Federal Ministry of Education and Research. Infineon is leading the project.
Vehicles already offer diverse communication interfaces and more and more automated functions, such as distance and lane-keeping assist systems. At the same...
A research team led by physicists at the Technical University of Munich (TUM) has developed molecular nanoswitches that can be toggled between two structurally different states using an applied voltage. They can serve as the basis for a pioneering class of devices that could replace silicon-based components with organic molecules.
The development of new electronic technologies drives the incessant reduction of functional component sizes. In the context of an international collaborative...
At the LASYS 2018, from June 5th to 7th, the Laser Zentrum Hannover e.V. (LZH) will be showcasing processes for the laser material processing of tomorrow in hall 4 at stand 4E75. With blown bomb shells the LZH will present first results of a research project on civil security.
At this year's LASYS, the LZH will exhibit light-based processes such as cutting, welding, ablation and structuring as well as additive manufacturing for...
There are videos on the internet that can make one marvel at technology. For example, a smartphone is casually bent around the arm or a thin-film display is rolled in all directions and with almost every diameter. From the user's point of view, this looks fantastic. From a professional point of view, however, the question arises: Is that already possible?
At Display Week 2018, scientists from the Fraunhofer Institute for Applied Polymer Research IAP will be demonstrating today’s technological possibilities and...
So-called quantum many-body scars allow quantum systems to stay out of equilibrium much longer, explaining experiment | Study published in Nature Physics
Recently, researchers from Harvard and MIT succeeded in trapping a record 53 atoms and individually controlling their quantum state, realizing what is called a...
25.05.2018 | Event News
02.05.2018 | Event News
13.04.2018 | Event News
25.05.2018 | Event News
25.05.2018 | Machine Engineering
25.05.2018 | Life Sciences