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Pensions and Saving: New International Panel Data Evidence

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  • Ricardo N. Bebczuk
  • Alberto R. Musalem

Abstract

This paper contributes to the empirical literature on pensions and saving by studying the influence of funded pension systems on the gross national saving rate using a sample of 48 developed and developing countries over the 1980-2004 period. To the best of our knowledge, this updated database –which builds on the one assembled by Lopez Murphy and Musalem (2004)- is the largest on pension funds stocks and flows. Our panel data econometric results suggest that a one-dollar increase in pension saving increases national saving by between 0 and 20 cents. The structure of the system in terms of mandatory participation and portfolio composition does not affect the results, but the maturity of the system does seem to be a robust driver of national saving, inducing an increase of the saving rate of 0.3-0.5 percentage points for each additional year of existence. Reforming countries does not seem to have attained higher saving rates than others. Concerning other saving drivers, the old age dependency ratio and the urbanization ratio (even though the latter loses significance in some regressions) were negatively correlated with saving, while GDP growth, inflation, the terms of trade, and the current account displayed a positive sign. In terms of saving projections, the rather declining trend in pension saving implies that this is unlikely to boost the national saving rate, but the rising old age dependency ratio might cause, over a 25-year time horizon, a fall in the saving rate of 2.1 and 3.3 percentage points in OECD and non-OECD countries, respectively.

Suggested Citation

  • Ricardo N. Bebczuk & Alberto R. Musalem, 2006. "Pensions and Saving: New International Panel Data Evidence," IIE, Working Papers 061, IIE, Universidad Nacional de La Plata.
  • Handle: RePEc:akh:wpaper:061
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    1. Richard Kohl & Paul O'Brien, 1998. "The Macroeconomics of Ageing, Pensions and Savings: A Survey," OECD Economics Department Working Papers 200, OECD Publishing.
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    2. Mohammad Reza Monjazeb & Marzieh Rashvand Sadeghi & Kobra Oladi, 2014. "Evaluation of the Effect of Liquidity Growth on Saving Rate in the Developing Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(7), pages 908-914, July.
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    4. Fadi Fawaz & Eric Frey & Deborah Piscitiello, 2019. "The effects of HIV mortality on saving and investment in Asia," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 9(1), pages 1-15, January.
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