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Pension Reform and the Fiscal Policy Stance
Author(s) -
Mackenzie G. A.,
Heller Peter S.,
Gerson Philip,
Cuevas Alfredo
Publication year - 2003
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/1540-5850.2301006
Subject(s) - consolidation (business) , economics , debt , pension , fiscal policy , payroll , deficit spending , monetary economics , macroeconomics , finance , accounting
The increased budget deficit caused by the privatization of a public pension plan does not imply a relaxation of the stance of fiscal policy. The reform's impact on the fiscal stance and national saving depends primarily on its effect on the sum of explicit and implicit public debt and on the postreform payroll tax and private system contribution rates. Its impact also depends on the difference between the rate of interest on implicit and that on explicit public debt, among other influences. Pension privatization, if not offset by fiscal consolidation, can loosen the fiscal stance in some circumstances.