Beggar Thy Thrifty Neighbour: The International Spillover Effects of Pensions Under Population Ageing

CentER Discussion Paper No. 2006-47

32 Pages Posted: 26 Jul 2006

See all articles by Yvonne Adema

Yvonne Adema

CPB Netherlands Bureau of Economic Policy Analysis

A. C. Meijdam

Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Economics

Harrie A. A. Verbon

Tilburg University - CentER; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 2006

Abstract

This paper explores the international spillover effects of ageing through capital markets when countries have different pension systems. We use a two-country two-period overlapping-generations model, where the two countries only differ in their pension schemes. Two forms of population ageing are considered, namely an increase in longevity and a fall in fertility. It is shown that in the long-run a country using a funded pension system experiences negative spillovers from the fact that the other country uses a PAYG system. The short-run spillovers, however, are opposite to the spillovers in the long-run.

Keywords: ageing, pensions, spillovers

JEL Classification: F21, H55, J11

Suggested Citation

Adema, Yvonne and Meijdam, A.C. (Lex) and Verbon, Harrie A. A., Beggar Thy Thrifty Neighbour: The International Spillover Effects of Pensions Under Population Ageing (April 2006). CentER Discussion Paper No. 2006-47, Available at SSRN: https://ssrn.com/abstract=919700 or http://dx.doi.org/10.2139/ssrn.919700

Yvonne Adema (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

A.C. (Lex) Meijdam

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 23 85 (Phone)
+31 13 466 30 42 (Fax)

Tilburg University - Department of Economics

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Harrie A. A. Verbon

Tilburg University - CentER ( email )

Department of Economics
P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 28 78 (Phone)
+31 13 466 30 42 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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