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Bayoumi, T., Laxton, D. and P. Pesenti, 2004, “Benefits and Spillovers of Greater Competition in the Europe: A Macroeconomic Assessment”, Working Paper 341, European Central Bank.
European Commission (EC), 2009b, “2009 Ageing Report: Economic and Budgetary Projections for the EU-27 member States (2008-2060).”
Girouard, N., and C. André, 2005, “Measuring Cyclically-adjusted Budget Balances for OECD Countries,” OECD Working Paper No. 434
Karam, P., D. Muir, J. Pereira, and A. Tuladhar, 2010, “Macroeconomic Effects of Public Pension Reforms,” IMF Working Paper 10/297
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Prepared by Keiko Honjo.
Assuming wages are linked to productivity, lower productivity reduces both wages and future pensions but given that the current pensions are linked to past productivity, the impact of lower productivity would be only neutral in the long run.
Six regions are Spain, Italy, Portugal, rest of the Euro area, United States, and the rest of the world.
Fiscal policy aims at stabilizing the government debt-to-GDP ratio over the long term by adjusting expenditure or taxes. Public investment is productive, enhancing private sector productivity. Governments levy lump-sum taxes, a consumption tax, a labor income tax, and a capital income tax. In addition, the model incorporates a wide range of rigidities in labor and product markets, reflecting, in part, barriers to competition. Monopolistic competition in labor and goods markets implies that wages and prices are higher than they would be under a more competitive environment; wages can contain a markup over the marginal rate of substitution between consumption and leisure; and prices can contain a markup over the marginal cost of production. For a complete description of the model, see Kumhof et al. (2010).
An increase in retirement age in GIMF is introduced by modifying two parameters, agents’ income profile over their average working life, and the population size. For more detail, see Karam et al. (2010).