This paper explores the international spillover effects of ageing through capital markets when countries have different pension systems. We use a two-country twoperiod 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.JEL codes: F21, H55, J11
This paper explores how pension reforms in countries with PAYG schemes affect countries with funded systems. We use a two-country two-period overlappinggenerations model, where the countries only differ in their pension systems. We distinguish between the case where a reform potentially leads to a Pareto improvement in the PAYG country, and where this is impossible. In the latter case, the funded country shares both in the costs and the benefits of the reform. However, if a Paretoimproving pension reform is feasible in the PAYG country, a Pareto improvement in the funded country is not guaranteed.Keywords International spillover effects · Pension reform JEL Classification F21 · F41 · F47 · H55 · H63
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