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
Researchers at the University of New Hampshire have captured a difficult-to-view singular event involving "magnetic reconnection"--the process by which sparse particles and energy around Earth collide producing a quick but mighty explosion--in the Earth's magnetotail, the magnetic environment that trails behind the planet.
Magnetic reconnection has remained a bit of a mystery to scientists. They know it exists and have documented the effects that the energy explosions can...
Biochips have been developed at TU Wien (Vienna), on which tissue can be produced and examined. This allows supplying the tissue with different substances in a very controlled way.
Cultivating human cells in the Petri dish is not a big challenge today. Producing artificial tissue, however, permeated by fine blood vessels, is a much more...
Faster and secure data communication: This is the goal of a new joint project involving physicists from the University of Würzburg. The German Federal Ministry of Education and Research funds the project with 14.8 million euro.
In our digital world data security and secure communication are becoming more and more important. Quantum communication is a promising approach to achieve...
On Saturday, 10 November 2018, the research icebreaker Polarstern will leave its homeport of Bremerhaven, bound for Cape Town, South Africa.
When choosing materials to make something, trade-offs need to be made between a host of properties, such as thickness, stiffness and weight. Depending on the application in question, finding just the right balance is the difference between success and failure
Now, a team of Penn Engineers has demonstrated a new material they call "nanocardboard," an ultrathin equivalent of corrugated paper cardboard. A square...
09.11.2018 | Event News
06.11.2018 | Event News
23.10.2018 | Event News
16.11.2018 | Health and Medicine
16.11.2018 | Life Sciences
16.11.2018 | Life Sciences