Monday, October 02, 2006

Recent research

(IPE) A recent paper from the Centre for Research on Pensions and Welfare Policies (CeRP, not to be mistaken for the CEPR) looks at the effectiveness of pensions reforms in Austria, Belgium, Finland, France, Germany, Italy, Portugal, Sweden & the UK in the 1990ies by evaluating the changes in private savings rates these reforms caused. Researchers worked on the assumption that the pensions reforms aimed to make public PAYG systems more fiscally sustainable in the light of demographic ageing, thus reducing public saving. This in turn should raise the propensity for private saving. Unfortunately no such significant increase in the private savings rate could be found. Thus, these reforms appear to have been largely ineffective from a macroeconomic point of view.
In my view, there could be two explanations for this: 1) The reforms effectively lowered public saving, but the public has not yet become aware of the need for correspondingly higher private savings. The consequences of this would be dire. 2) The reforms did not have the effect intended to reduce public saving. In any case, this paper's macroeconomic perspective on policymaking is rather refreshing.

Initially mistaking the CeRP for the CEPR, I subsequently checked their (also not RSS equipped!) site and found two not so recent, but even more interesting and fascinating reports focusing on the respective microstructures of two highly relevant markets for European pension funds: the European corporate bond market and the European government bond market. Those markets' structures are analysed with a view to increasing their transparency, liquidity and efficiency, ostensibly by means of EU regulation. A combination of an up-to-date description of market structures and a game theoretical assessment of the impact of regulation on said criteria make for a highly educational read for everyone who is interested in European fixed interest markets.

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