Intergenerational Risk Sharing in Time-Consistent Funded Pension Schemes

Intergenerational risk sharing by funded pension schemes may increase welfare in an ex ante sense. However, it also suffers from a time inconsistency problem. In particular, young generations may be unwilling to start participating in a pension scheme if this requires them to make huge transfers to older generations. This paper explores if limiting the transfers between generations can make a funded pension scheme time-consistent. The paper finds that this is possible indeed in a more or less realistic economic environment; it is not the case in general however. The form of the time-consistent scheme (how strong are the limits to transfers) is found to be very responsive to the economic environment. The time-consistent scheme offers lower welfare than the original time-inconsistent scheme, but higher welfare than a defined-contribution scheme without any intergenerational risk sharing.

Kinetics of the low-temperature pyrolysis of polyethene, polypropene and polystyrene modeling, experimental determination and comparison with literature models and data

The pyrolysis kinetics of low-density polyethylene, high-density polyethylene, polypropylene, and polystyrene has been studied at temperatures below 450 C. In addition, a literature review on the low-temperature pyrolysis of these polymers has been conducted and has revealed that the scatter in the reported kinetic data is significant, which is most probably due to the use of simple first-order kinetic models to interpret the experimental data. This model type is only applicable in a small conversion range, but was used by many authors over a much wider conversion range. In this investigation the pyrolysis kinetics of the forementioned polymers and a mixture of polymers has been studied at temperatures below 450 C by performing isothermal thermogravimetric analysis (TGA) experiments. The TGA experimental data was used to determine the kinetic parameters on the basis of a simple first-order model for high conversions (70-90%) and a model developed in the present study, termed the random chain dissociation (RCD) model, for the entire conversion range. The influence of important parameters, such as molecular weight, extent of branching and -scission on the pyrolysis kinetics was studied with the RCD model. This model was also used to calculate the primary product spectrum of the pyrolysis process. The effect of the extent of branching and the initial molecular weight on the pyrolysis process was also studied experimentally. The effect of the extent of branching was found to be quite significant, but the effect of the initial molecular weight was minor. These results were found to agree quite well with the predictions obtained from the RCD model. Finally, the behavior of mixtures of the aforementioned polymers was studied and it was found that the pyrolysis kinetics of the polymers in the mixture remains unaltered in comparison with the pyrolysis kinetics of the pure polymers

Intergenerational risk sharing and labour supply in collective funded pension schemes with defined benefits

Collective funded pension schemes with defined benefits (DB) raise welfare through intergenerational risk sharing, but may lower welfare through distortion of the labour-leisure decision. This paper compares the welfare gains with the welfare losses. In many countries, collective funded pension schemes with defined benefits (DB) are being replaced by individual schemes with defined contributions. Collective funded DB pensions may indeed reduce social welfare when the schemes feature income-related contributions that distort the labour-leisure decision. However, these schemes also share risks between generations and�add to welfare if these risks cannot be traded on capital markets. Do�the�gains outweigh the losses? For answering this question, we adopt a two-period overlapping-generations model for a small open economy with risky returns to equity holdings. We derive analytically that the gains dominate the losses for the case of Cobb-Douglas preferences between labour and leisure. Numerical simulations for the more general CES case confirm these findings, which also withstand a number of other model modifications (like the introduction of a short-sale constraint for households and the inclusion of a labour income tax). These results suggest that collective funded schemes with well-organized risk sharing are preferable over individual schemes, even if labour market distortions are taken into account.

Can we afford to live longer in better health?

This document analyses the effects of ageing populations upon public finances. More specifically, it focuses on the implications of ageing for acute health care, long-term care, and public pension expenditure. It does so for 15 EU countries. �It pays particular attention to three novel insights: (i) a large part of health care spending relates to time to death rather than to age: (ii) life expectancy may increase much faster than current demographic projections suggest, and (iii) the average health status may continue to improve in the future. It adopts a generational accounting model that incorporates health care costs during the last years of life, decomposed into an acute health care component and a long-term care component. The projections show that gains in life expectancy increase age-related expenditure; better health has the opposite effect. Combined, these trends reduce health care expenditure and increase pension expenditure. Their joint effect upon public finance is rather modest, however. Hence, the assessment of public finances in most EU15 countries does not change: even if a faster increase in life expectancy should combine with an improvement in health, current fiscal and social security institutions are unsustainable.

Financing medical specialist services in the Netherlands; welfare implications of imperfect agency

From 1995 onward the financing scheme for specialist care in the Netherlands has moved from a fee-for-service scheme to a lump-sum budget scheme. This paper analyses the economic and welfare effects of this policy change. The paper adopts a model that integrates demand and supply considerations and recognizes the potential roles of moral hazard and supplier-induced demand. The model is fully numerical, being estimated and calibrated upon data for the Dutch health care sector. The paper finds that the shift in financing regime has been welfare-reducing. The policy change induced medical specialists to lower the supply of health services which was already too low from a welfare point of view. This conclusion is robust to significant changes in major parameter values.

The influence of tax and expenditure policies on economic growth in The Netherlands: An empirical analysis

This paper explores the influence of government policies in explaining output, emploment and investment in The Netherlands during the period 1966-1989. The paper develops an empirical macroeconomic model estimated with annual data relating to the period 1958-1989. It finds that restrictive fiscal policies in the eighties have had adverse short-term effects on output and employment. Furthermore, the drop in the rate of increase in tax and social security contribution rates in this period has boosted output, employment and investment. However, the shift in public expenditure from investment to consumption has exerted a negative impact on these variables, largely offsetting the positive impact of the tax policies

Development, modelling and evaluation of a (laminar) entrained flow reactor for the determination of the pyrolysis kinetics of polymers.

Laminar Entrained Flow Reactors were examined to determine whether this type of reactor can be used to measure the kinetic parameters of the pyrolysis reaction of polymers. In case the EFR was operated in the turbulent regime or the diameter of the reactor was to small, sticking of polymer to the reactor wall, became a major problem. In the laminar flow regime this problem did not occur and this operation regime was determined as a function of the Reynolds number. Due to the necessity of operation in the laminar regime significant temperature and velocity gradients exist in the EFR. To correct for these gradients a model was developedincorporating the Navier - Stokes equations to describe the gas phase velocity and temperature distributions and a single particle model to describe the conversion of the individual particles. While correction of the experimental data for the axial gradients proved to be possible, it was not possible to correct this data for radial gradients in the reactor due to the uncertainty in the radial position of the particle. Experiments were performed and corrected for the aforementioned gradients to obtain the first order kinetic parameters for the pyrolysis of LDPE. However, these parameters are inaccurate and therefore a LEFR is preferably not to be used to determine kinetics of particles, if operation of the EFR in the laminar regime is necessary (sticking particles). If possible (non-sticking particles) the EFR should be operated in the turbulent regime. Finally our pyrolysis experiments of LDPE showed that intermediate wax - like products are produced during the pyrolysis reaction, which are pyrolysed further in the gas phase

The impact of demographic uncertainty on public finances in the Netherlands

This paper presents stochastic simulations, i.e. simulations that combine the CGE model of the Dutch economy GAMMA with stochastic population projections, to quantify uncertainties surrounding the consequences of population ageing for Dutch public finances. The expected increase in the ratio of retirees to workers that is due to population ageing is sure to increase pressure on public finances and the Dutch economy in the coming decades. However, because of the uncertainty regarding future demographic developments, the exact extent of the problem is unknown. This paper quantifies the�uncertainties by stochastic simulation.

Pension Reform in the Netherlands

During the last decade, the Dutch have debated intensively reforming their second-pillar pension scheme. Meanwhile, ten years turned out to be a too short period for pension funds to bring their funding ratios to sound levels, due to among others the worldwide decline of interest rates. Currently, the Dutch government and the social partners have come up with a quite concrete reform plan. The plan includes three main points: i) make the move towards actuarially fair pension accruals, ii) strengthen the link between benefit levels and capital market rates of return and iii) introduce the option to take up part of accrued pension wealth at retirement. This paper reviews and interprets the plan for pension reform