The Spanish Pension System: Overview and Long-Term Projections

In the middle of the so-called pension crisis, the ageing of population and the sharp decrease in affiliations to Social Security are threatening the well-functioning of the Spanish public pension system. The purpose of this paper is to present the main challenges to be faced by the Spanish pension system, as well as to shed light on the main determinants that will condition the evolution of pension expenditure over GDP along the following decades. This quantitative analysis, which considers the 2011 and 2013 pension reforms, uses the latest data on the Spanish demographic, labor market and institutional factors in order to project the evolution of the system from the expenditure side up to 2060. For the purpose of analyzing the dynamics and the underlying drivers of pension expenditure, the so-called aggregate accounting approach will be utilized. The alternative scenarios proposed allow for exploring the robustness of the results within the baseline scenario, which constitutes the reference point of projections in the exercise. The analysis concludes that, by the end of the projected period, Spain will count on a similar public pension expenditure ratio as the current one.

Methods for Measuring Aggregate Costs of Conflict

This paper reviews the methods for measuring the economic cost of conflict. Estimating the economic costs of conflict requires a counterfactual calculation, which makes this a very difficult task. Social researchers have resorted to different estimation methods depending on the particular effect in question. The method used in each case depends on the units being analyzed (firms, sectors, regions or countries), the outcome variable under study (aggregate output, market valuation of firms, market shares, etc.) and data availability (a single cross-section, time series or panel data). This paper reviews existing methods used in the literature to assess the economic impact of conflict: cost accounting, cross-section methods, time series methods, panel data methods, gravity models, event studies, natural experiments and comparative case studies. The paper ends with a discussion of cost estimates and directions for further research.

Income Taxation and Growth in an OLG Economy: Does Aggregate Uncertainty Play any Role?

We analyze the effects of capital income taxation on long-run growth in a stochastic, two-period overlapping generations economy. Endogenous growth is driven by a positive externality of physical capital in the production sector that makes firms exhibit an aggregate technology in equilibrium. We distinguish between capital income and labor income, and between attitudes towards risk and intertemporal substitution of consumption. We show necessary and sufficient conditions such that i) increments in the capital income taxation lead to higher equilibrium growth rates, and ii) the effect of changes in the capital income tax rate on the equilibrium growth may be of opposite signs in stochastic and in deterministic economies. Such a sign reversal is shown to be more likely depending on i) how the intertemporal elasticity of substitution compares to one, and ii) the size of second- period labor supply. Numerical simulations show that for reasonable values of the intertemporal elasticity of substitution, a sign reversal shows up only for implausibly high values of the second- period’s labor supply. The conclusion is that deterministic OLG economies are a good approximation of the effect of taxes on the equilibrium growth rate as in Smith (1996).

Analysis of the differences between the rates of inflation associated with two aggregate price level: The case of the euro area and the United States

Idioma: Inglés Abstract: This project focuses on two indicators of prices, the GDP deflator and the consumer price index (CPI), and analyzes the differences and similarities they present. These price indexes have been chosen taking into account its great representativeness and importance to economic and social level, and its direct relationship to the overall functioning of the economy and, in particular, inflation. It should be also mentioned that this study was conducted for cases of the euro area and the United States, as the impact of these economies in the economic and social situation at international level is very significant.