Macro-Experimental strongEconomicsstrong in the Kyrgyz Republic Social.pdf

COMPARATIVE ECONOMIC STUDIES, XLIII, NO. 3 (FALL 2001), XXX Macro-Experimental Economics in the Kyrgyz Republic: Social Security Sustainability and Pension Reform Charles M. Becker Department of Economics, University of Colorado at Denver Sergey Paltsev Department of Economics, University of Colorado at Boulder Despite a decade of transition, pension systems in formerly socialist countries still desperately need viable reform. This paper assesses reform packages advocated by different international agencies, and considers their sensitivity to varying economic and demographic assumptions. Failure to account for demographic-economic interactions strongly biases forecasts. Few viable reform options exist, due to the near absence of capital markets, the collapse of formal sector employment, and huge differences between ur- ban and rural sectors. The divergent results from projections made under different assumptions imply that policymakers should examine the realism of policy suggestions (and associated actuarial forecasts) very carefully. ______________________ Many people have offered valuable comments on this paper and its predecessors. Paulette Castel and Anita Schwarz at the World Bank were extremely generous with data, model, and advice. Philip Goldman, David Weig, and two anonymous referees provided valuable comments on earlier drafts of this paper, and Umit Ukaeva offered excellent statistical support. This paper also benefited from comments during seminars at the Kyrgyz Social Fund, World Bank, Asian Development Bank, and University of Colorado at Denver. All errors and misinterpretations, however, remain our own. 1 2