The Economic and Financial Market Consequences of Global Ageing

One: Economic and Financial Market Consequences of Global Ageing.- Executive Overview.- Section 1: Global Demographic Trends and Forecasts 1950-2050.- Section 2: How is Ageing Likely to Impact Economically over the Next 50 Years: What are the Main Transmission Mechanisms?.- 2.1: Expenditure Pressures on the Public Finances.- 2.2: Demographic Change and Savings Behaviour.- Box 1: Demographic Change and Savings Behaviour: Theoretical Considerations and Empirical Evidence.- 2.3: Labour Supply Implications.- 2.4: Capital Accumulation and Total Factor Productivity.- 2.5: Interest Rate, Exchange Rate and Balance of Payments Developments.- Box 2: Overview of the Basic Theoretical Mechanisms in the Ageing Model.- Section 3: Global Capital Market Developments, Current Account Imbalances and the Evidence for Agerelated International Capital Flows.- 3.1: External Capital Movements: an Historical Perspective.- 3.1.1: Global Trends: 1870-2000: has the Degree and Nature of Capital Market Integration Changed Overtime?.- 3.1.2: Country Specific Developments: Overview of Capital Market Integration Trends for the EU, US, Japan, Fast Ageing and Slow Ageing Countries: 1970-1998.- Box 3: Gross Capital Movements: Indicator of Degree of Capital Market Openness.- 3.2: Demographics and Foreign Capital Flows: Have Age-Related Capital Movements Been a Feature of Recent Decades?.- 3.3: Future Trends in International Capital Movements.- Box 4: Tracking the Trend Evolution of Net Foreign Assets: Global Capital Market Restrictions and the Growing Concentration of Capital Flows into the Us.- Section 4: Global Ageing Scenario 2000-2050.- 4.1: Model Assumptions.- 4.2: Key Results.- Box 5: Comparison of Growth Rates of GDP, Population and Living Standards for the Period 1950-2000 with that of the Model's Central Scenario for 2000-2050.- Section 5: Policy Response: How Can the EU and the World as a Whole Effectively Deal with the Challenges of Ageing?.- 5.1: Dealing with Ageing - What Should be the Focus of EU Policy Reforms?.- Box 6: EU Budgetary Prudence: The Importance of Respecting the Stability and Growth Pact.- 5.2: Dealing with the International Financial Market Effects of Ageing: More Not Less Globalisation is Needed.- Box 7: Income Convergence: Theoretical and Empirical Evidence.- Detailed Summary of Main Points from Part 1.- Two: EU Pension Reform - an Overview of the Debate and an Empirical Assessment of the Main Policy Reform Options.- Executive Overview of Key Policy Conclusions.- Introductory Remarks.- Section 1: Overview of the Pension Reform Debate.- 1.1: Key Issues and Concepts.- 1.2: Main Driving Forces behind the Growing Calls for Pension Reform.- 1.2.1: Historical Analysis 1960-2000: What was the Role of Demographic, Labour Market and Generosity Factors in Determining the Past Growth of EU and us Public Pension Expenditure ?.- 1.2.2: Future Evolution 2000-2050: What are the Implications of Ageing for Growth and Pension Expenditure Trends in the EU and the us?.- 1.3: What are the Possible Policy Solutions?.- Section 2: Description of Model Used to Assess the Pension Reform Options.- 2.1: Model's Central Scenario of the Growth and Pension Expenditure Implications in the EU of Ageing Populations (2000-2050).- 2.2: Assessing the Explanatory Power of the Ageing Model: A Comparison with the Pension Projections from the EU's Economic Policy Committee.- 2.3: Criteria for Evaluating the Effectiveness of the Various PAYG and Systemic Pension Reform Options Analysed in Sections 3 to 5.- Section 3: PAYG System: Economic Assessment of the Main Parametric / Labour Market Reform Options: What is needed to Bring the System Back into Equilibrium?.- 3.1: Changes to the Generosity of the PAYG System (Partial V Full Shift from Wage to Price Indexation).- 3.2: An Increase in the Effective Retirement Age.- 3.3: Broad Package of "Payg" Reforms: Labour Market + Generosity + Retirement Age Changes.- Section 4: Systemic Reform: 2 Key Factors to be Considered: Internal Rates of Return + Transition Burden.- 4.1: Forecasts for the Internal Rate of Return of the PAYG + Funded Pension Systems: 2000-2050 (Central Scenario + Sensitivity Analysis).- 4.2: Forecasts for the Transition Burden in 2000 and its Evolution to 2050 (Central Scenario + Sensitivity Analysis).- Section 5: Economic Assessment of a Full / Partial Shift to Funding.- 5.1: 100% Shift to Funding: Compulsory Savings Option.- 5.2: 100% Shift to Funding: Voluntary Savings Option.- 5.3: Partial Shift to Funding + Stabilisation of PAYG System.- Section 6: An "Optimal" EU Pension Reform Strategy.- 6.1: Basic Policy Options with Regard to Public Pension Systems.- 6.2: Optimal Package of Reforms + Two Stage Transition Path.- Box 1: "Optimal"2050.- Section 2: How is Ageing Likely to Impact Economically over the Next 50 Years: What are the Main Transmission Mechanisms?.- 2.1: Expenditure Pressures on the Public Finances.- 2.2: Demographic Change and Savings Behaviour.- Box 1: Demographic Change and Savings Behaviour: Theoretical Considerations and Empirical Evidence.- 2.3: Labour Supply Implications.- 2.4: Capital Accumulation and Total Factor Productivity.- 2.5: Interest Rate, Exchange Rate and Balance of Payments Developments.- Box 2: Overview of the Basic Theoretical Mechanisms in the Ageing Model.- Section 3: Global Capital Market Developments, Current Account Imbalances and the Evidence for Agerelated International Capital Flows.- 3.1: External Capital Movements: an Historical Perspective.- 3.1.1: Global Trends: 1870-2000: has the Degree and Nature of Capital Market Integration Changed Overtime?.- 3.1.2: Country Specific Developments: Overview of Capital Market Integration Trends for the EU, US, Japan, Fast Ageing and Slow Ageing Countries: 1970-1998.- Box 3: Gross Capital Movements: Indicator of Degree of Capital Market Openness.- 3.2: Demographics and Foreign Capital Flows: Have Age-Related Capital Movements Been a Feature of Recent Decades?.- 3.3: Future Trends in International Capital Movements.- Box 4: Tracking the Trend Evolution of Net Foreign Assets: Global Capital Market Restrictions and the Growing Concentration of Capital Flows into the Us.- Section 4: Global Ageing Scenario 2000-2050.- 4.1: Model Assumptions.- 4.2: Key Results.- Box 5: Comparison of Growth Rates of GDP, Population and Living Standards for the Period 1950-2000 with that of the Model's Central Scenario for 2000-2050.- Section 5: Policy Response: How Can the EU and the World as a Whole Effectively Deal with the Challenges of Ageing?.- 5.1: Dealing with Ageing - What Should be the Focus of EU Policy Reforms?.- Box 6: EU Budgetary Prudence: The Importance of Respecting the Stability and Growth Pact.- 5.2: Dealing with the International Financial Market Effects of Ageing: More Not Less Globalisation is Needed.- Box 7: Income Convergence: Theoretical and Empirical Evidence.- Detailed Summary of Main Points from Part 1.- Two: EU Pension Reform - an Overview of the Debate and an Empirical Assessment of the Main Policy Reform Options.- Executive Overview of Key Policy Conclusions.- Introductory Remarks.- Section 1: Overview of the Pension Reform Debate.- 1.1: Key Issues and Concepts.- 1.2: Main Driving Forces behind the Growing Calls for Pension Reform.- 1.2.1: Historical Analysis 1960-2000: What was the Role of Demographic, Labour Market and Generosity Factors in Determining the Past Growth of EU and us Public Pension Expenditure ?.- 1.2.2: Future Evolution 2000-2050: What are the Implications of Ageing for Growth and Pension Expenditure Trends in the EU and the us?.- 1.3: What are the Possible Policy Solutions?.- Section 2: Description of Model Used to Assess the Pension Reform Options.- 2.1: Model's Central Scenario of the Growth and Pension Expenditure Implications in the EU of Ageing Populations (2000-2050).- 2.2: Assessing the Explanatory Power of the Ageing Model: A Comparison with the Pension Projections from the EU's Economic Policy Committee.- 2.3: Criteria for Evaluating the Effectiveness of the Various PAYG and Systemic Pension Reform Options Analysed in Sections 3 to 5.- Section 3: PAYG System: Economic Assessment of the Main Parametric / Labour Market Reform Options: What is needed to Bring the System Back into Equilibrium?.- 3.1: Changes to the Generosity of the PAYG System (Partial V Full Shift from Wage to Price Indexation).- 3.2: An Increase in the Effective Retirement Age.- 3.3: Broad Package of "Payg" Reforms: Labour Market + Generosity + Retirement Age Changes.- Section 4: Systemic Reform: 2 Key Factors to be Considered: Internal Rates of Return + Transition Burden.- 4.1: Forecasts for the Internal Rate of Return of the PAYG + Funded Pension Systems: 2000-2050 (Central Scenario + Sensitivity Analysis).- 4.2: Forecasts for the Transition Burden in 2000 and its Evolution to 2050 (Central Scenario + Sensitivity Analysis).- Section 5: Economic Assessment of a Full / Partial Shift to Funding.- 5.1: 100% Shift to Funding: Compulsory Savings Option.- 5.2: 100% Shift to Funding: Voluntary Savings Option.- 5.3: Partial Shift to Funding + Stabilisation of PAYG System.- Section 6: An "Optimal" EU Pension Reform Strategy.- 6.1: Basic Policy Options with Regard to Public Pension Systems.- 6.2: Optimal Package of Reforms + Two Stage Transition Path.- Box 1: "Optimal" Policy Strategy: Maximising the Growth Rate Effects from Reform.- Detailed Summary of Main Points from Part 2.- Three: Annexes.- Annex 1: Member States Analysis.- Annex 2: Detailed Description of Ageing Model.- Annex 3: Basic Data on Savings, Wealth Holdings and Retirement Income Financing.- Annex 4: Results of Comparable Ageing Studies.- Annex 5: Prefunding within the PAYG System: Intergenerational Equity Objective.- List of Graphs.- List of Tables.- References.