Public and Private Pension Systems and Macroeconomic Volatility in OECD Countries


Mario Holzner, Stefan Jestl and David Pichler

wiiw Working Paper No. 172, December 2019
38 pages including 21 Tables and 2 Figures

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This paper analyses the impact of public pension expenditures and pension funds’ assets as well as their benefits on economic volatility. To do so, we use panel data for 35 OECD countries for the period 1980-2018 and apply a set of state-of-the-art econometric estimators. Our results show weak evidence of a negative impact of public pension expenditures as well as weak evidence of a positive impact of pension funds’ benefits on volatility. Results were, however, found not to be very robust. In contrast, pension funds’ assets do not show any evidence of being associated with economic volatility. Unsystematic fiscal policy, banking crises and political (in)stability, however, are revealed to be somewhat more robust determinants of economic volatility.


Keywords: Public pensions, private pensions, pension system, macroeconomic volatility, OECD

JEL classification: H55, J32, E24, E32

Countries covered: OECD

Research Areas: Macroeconomic Analysis and Policy