:: Volume 12, Issue 4 (Fall 2017) ::
J. Mon. Ec. 2017, 12(4): 455-479 Back to browse issues page
Macroeconomic and Welfare Effects of Parametric Pension Reform in Iran
Sonia Sabzalizad Honarvar 1, Hossein Raghfar1, Mirhossein Mousavi1
1- Alzahra University
Abstract:   (865 Views)
The aim of this paper is to analyze the macroeconomic effects of parametric reforms. An adjusted Auerbach-Kotlikoff model is used to study the effects of decreasing replacement and contribution rates of the pension system. The first part concentrates on the macroeconomic effect of reforms. Our results indicate that reducing the replacement and contribution rates increase the capital stock and decrease the interest rates so the economy moves closer towards the golden rule. Under these parametric reforms, there is a long-run increase in capital stock, wages, labor supply, consumption and income of the future generations. We then measure the welfare effects of different generations and finally show how to use a Lump-Sum Redistribution Authority to calculate an aggregate efficiency measure of policy reforms. Our findings suggest an aggregate efficiency gain of 32.14 % (for replacement rate) and 4.04 % (for contribution rate) compared to the initial equilibrium.
Keywords: : Stochastic OLG Model, Pension Reforms, Welfare
Full-Text [PDF 403 kb]   (717 Downloads)    
Type of Study: Original Research - Theoric | Subject: Macroeconomics
Received: 2 Oct 2018 | Accepted: 23 Sep 2019 | Published: 23 Sep 2019


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Volume 12, Issue 4 (Fall 2017) Back to browse issues page