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Does funding of pensions stimulate economic growth?*

Published online by Cambridge University Press:  15 April 2008

E. PHILIP DAVIS  and
YU-WEI HU
E. PHILIP DAVIS
Affiliation:
Brunel University, Uxbridge, Middlesex, UB8 3PH, UK (e-mail: [email protected]
YU-WEI HU
Affiliation:
OECD, Paris
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Abstract

Debate over superiority of pension funding over pay-as-you-go links notably to the question whether funding improves economic performance sufficiently to generate additional resources to meet the needs of an ageing population. To address this issue, we design a modified Cobb–Douglas production function with pension assets as a shift factor, and investigate the direct link between pension assets and economic growth employing a dataset covering up to 38 countries, using a variety of appropriate econometric methods. We find positive results for both OECD countries and Emerging Market Economies (EMEs), with consistent evidence for a larger effect for EMEs than OECD countries.

Type
Issues & Policy
Information
Journal of Pension Economics & Finance , Volume 7 , Issue 2 , July 2008 , pp. 221 - 249
Copyright
Copyright © 2008 Cambridge University Press

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