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
“Core-shell” clusters pave the way for new efficient nanomaterials that make catalysts, magnetic and laser sensors or measuring devices for detecting electromagnetic radiation more efficient.
Whether in innovative high-tech materials, more powerful computer chips, pharmaceuticals or in the field of renewable energies, nanoparticles – smallest...
An international research team with Prof. Cornelia Denz from the Institute of Applied Physics at the University of Münster develop for the first time light fields using caustics that do not change during propagation. With the new method, the physicists cleverly exploit light structures that can be seen in rainbows or when light is transmitted through drinking glasses.
Modern applications as high resolution microsopy or micro- or nanoscale material processing require customized laser beams that do not change during...
Although no life has been detected on the Martian surface, a new study from astrophysicist and research scientist at the Center for Space Science at NYU Abu...
New approach creates synthetic layered magnets with unprecedented level of control over their magnetic properties
The magnetic properties of a chromium halide can be tuned by manipulating the non-magnetic atoms in the material, a team, led by Boston College researchers,...
Scientists of Tomsk Polytechnic University jointly with a team of the V.E. Zuev Institute of Atmospheric Optics of the Siberian Branch of the Russian Academy of Sciences have discovered a method to increase the operation range of optical traps also known
Optical tweezers are a device which uses a laser beam to move micron-sized objects such as living cells, proteins, and molecules. In 2018, the American...
23.07.2020 | Event News
21.07.2020 | Event News
07.07.2020 | Event News
03.08.2020 | Information Technology
03.08.2020 | Information Technology
03.08.2020 | Life Sciences