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22. Thinking about pension systems for the 21st century: A few remarks based on the Polish example
- Author:
- Marek Gora
- Publication Date:
- 07-2018
- Content Type:
- Working Paper
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- The end of 2018 will mark the 20th anniversary of the introduction of Poland’s current pension system. It has been subjected to constant modifications, in general dictated by either ideological or ad hoc goals, but it has resisted destruction, and in essence is working as it was designed. The need for its introduction, misleadingly called a reform, was dictated by a long-term shift in the age structure of the population. In essence, the earlier system was replaced by the current one. The essence of this switch is a shift from the quasi-tax financing suited to the population structure by age of the past, to quasi-savings financing suited to the structure in the 21st century. This text is not an overview of the 20-year history of the current system; it is a critical examination of the functioning of Poland’s pension system against the backdrop of the universal challenges that pension systems are facing in the 21st century. The text barely touches on many fundamental questions. A full discussion of them would require a longer discourse, for which there is no space here. The purpose of introducing the current system was to balance the interests of the working generation and the generation of retirees. The previous system worked only for the interests of retirees, while those of the working generation, expressed in the level of its net income, was treated as an afterthought. This kind of system could operate in the 20th century. But in the 21st, it turned out to be not so much immediately impossible, as socially harmful. A change of system was thus essential. The current system is now quite well suited to the current population structure. The biggest problem in its functioning is citizens’ negligible awareness of how it is actually structured and what that implies – both on the macro level and on the level of individual behaviors. Pension issues are counterintuitive. This results both from their combination of macro- and microeconomic issues and from the fact that their time horizon exceeds any other undertaking. For a pension system to work well, it has to be understood by its participants; meanwhile, pension education practically does not exist. What’s worse, the public debate concerning pensions tends to frighten people rather than helping them. Instead of knowledge, there are chaotic assumptions, often far removed from reality. They are adopted as axiomatic, or as a result of inertia in thinking, or unrealistic expectations. In the first case, the current system is perceived as if it were the previous one. Meanwhile, in reality they are fundamental opposites. In the second case, people expect that the system will miraculously multiply the funds available for pensions. But in reality each system can only divide up what has been created. Discussions partly concern side issues, partly consist of misunderstandings and partly are derivations of general views. Much harm was done by the discussion on changing the proportions of the division of contributions in the universal system (the so-called OFE discussion). Debate on pension questions requires that the issues be laid out in an orderly fashion; we need a critical view of basic concepts and how they are understood. Without that there is no chance to solve the problems of pensions systems, or even to understand what they’re about.
- Topic:
- Demographics, Labor Issues, Finance, and Social Policy
- Political Geography:
- Europe, Poland, and European Union
23. How Not to Get Stuck in the Middle Lessons for the Commonwealth of Independent States from Central and Eastern Europe
- Author:
- Jakub Zowczak and Kamil Pruchnik
- Publication Date:
- 09-2017
- Content Type:
- Working Paper
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- The aim of this paper is to analyze how different models of transformation in Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS) increased or decreased the risk of being stuck in the middle-income trap (MIT). The key finding is that the CEE and CIS countries are, from a definition point of view, not materially at risk of the MIT as out of nine selected MIT definitions, none of the CEE or CIS countries were “stuck” more than three times. At the same time, the CEE countries are more at risk of falling into the MIT than the CIS countries; however this is because the CIS is a poorer region and is not near the lower MIT thresholds. The CEE countries had a better start at the beginning of the transformation and on average implemented a better set of transformation models; however, some CEE countries are now struggling to permanently join the advanced countries and CIS countries are, on average, far behind that. The literature review on transformation models and the analysis of the “jumps” in the World Bank ranking classification suggest that while the MIT is not a concern for CEE or CIS countries, in order to speed up convergence, CIS countries might consider more shocks and consistently following free market related approaches. The study fills a gap in the literature on the MIT which has thoroughly analyzed the Asian and Latin American countries but has provided little analysis of the CEE and CIS countries.
- Topic:
- Finance, Economic growth, Economic Policy, and Trade
- Political Geography:
- Europe, Eastern Europe, and Central Europe
24. More for less: What tax system for Poland?
- Author:
- Stanisław Gomułka, Jarosław Neneman, and Michał Myck
- Publication Date:
- 10-2017
- Content Type:
- Special Report
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- What are the challenges facing Poland’s economy and tax system over the next 20 years? What does the optimal tax system mean? Do we have high taxes in Poland? The goal of the publication is to initiate a discussion on the subject of a tax system for Poland, presenting a framework within which the current system should be analyzed and conclusions drawn about what changes are needed over the longer term. Professor Stanisław Gomułka, chief economist of the Business Centre Club, analyzes the challenges facing Poland’s economy and tax system over the next 20 years. Jarosław Neneman, an assistant professor at Łazarski University, presents the basic parameters for a planned academic research project on how to use the Polish tax system effectively. Michał Myck, director and board member of CenEA (the Center for Economic Analysis) describes the optimal characteristics of a tax system according to theory and the results of scholarly research, which of course also relates to the Polish tax system.
- Topic:
- Economics, Finance, Tax Systems, and Fiscal Policy
- Political Geography:
- Europe, Poland, and European Union
25. Economic policy, the international environment and the state of Poland’s public finances: Scenarios
- Author:
- Aleksander Łaszek
- Publication Date:
- 03-2017
- Content Type:
- Special Report
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- Poland’s structural deficit is one of the largest in the EU. While other Member States are taking action to reduce their deficits, the Polish government has not only introduced costly projects, but has also announced additional projects that will further aggravate the state of Polish public finances. The aim of maintaining the nominal deficit under 3% of GDP, as declared by the government, is insufficient because it does not leave a margin of safety in case of an economic slowdown. In the meantime, the turbulent global economy and the structural challenges the Polish economy is facing make the scenario of an economic slowdown increasingly plausible. Dr. Aleksander Łaszek evaluates the government’s current policy through the lens of the challenges that stand a head of Polish economy, and its resilience to shocks, in the new mBank-CASE Seminar Proceedings "Economic policy, the international environment and the state of Poland’s public finances: Scenarios".
- Topic:
- Debt, Government, Finance, Economic growth, Trade, and Deficit
- Political Geography:
- Europe, Poland, and European Union
26. Fiscal Sustainability: Conceptual, Institutional, and Policy Issues
- Author:
- Marek Dabrowski
- Publication Date:
- 08-2016
- Content Type:
- Working Paper
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- 'Since 2008, the world economy has been facing the consequences of the global financial crisis. As a result, many economic policy paradigms have been revised, and this process is far from complete. The policy area, which needs a fundamental rethinking (especially in advanced economies), relates to the role of public finance and fiscal policy in ensuring economic growth and financial stability. The primary task will be to develop a new analytical approach and detailed indicators, which are necessary to provide a correct diagnosis and effective recommendations.' What are the “safe” levels of budget deficit and public debt during “normal” or “good” times? Is there a single norm of fiscal safety?
- Topic:
- Debt, Financial Crisis, Finance, Global Financial Crisis, Macroeconomics, Fiscal Policy, and Deficit
- Political Geography:
- Europe, Global Focus, and Global Markets
27. Quo vadis, Ukraine? Is there a chance for success?
- Author:
- Ivan Mikloš
- Publication Date:
- 01-2016
- Content Type:
- Special Report
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- "If I were to say just one thing about Ukraine, I think I would have to stress it is the most underperforming country of all the countries I know. Ukraine has had, and indeed still does have, a lot of potential. In the beginning of 1990s, in 1992 to be precise, Deutsche Bank prepared an analysis of the chances for the former Soviet Union states to be reformed and developed successfully, and according to this analysis, Ukraine had the best chance among them all to be successful. We know that in reality the opposite happened, and Ukraine is in a very difficult situation now. The main reason for this situation is that when at the beginning of 1990s communist countries collapsed, the old system in Ukraine was not replaced by a new one, one of functioning market economy. It was eroded, but not exactly replaced the way it happened for example in Poland, Czechoslovakia, Hungary, and the Baltic states. The country was captured by oligarchs, and a very strange, dysfunctional, and corrupted system was created instead."
- Topic:
- Development, Economies, Finance, Economic growth, Trade, and Post-Socialist Economies
- Political Geography:
- Europe, Central Asia, Ukraine, Caucasus, Eastern Europe, and Poland
28. Poland in the European Union.Ten Years of Membership
- Author:
- Katarzyna Kolodziejczyk
- Publication Date:
- 01-2016
- Content Type:
- Journal Article
- Journal:
- Revista UNISCI/UNISCI Journal
- Institution:
- Unidad de investigación sobre seguridad y cooperación (UNISCI)
- Abstract:
- Twelve years have passed since the Polish entry into the European Union. For Poland the date of 1 May 2004 is the culmination of a transformation process launched at the end of the Cold War in 1989. One of the priorities of Polish foreign policy, the expansion of the political, economic and cultural relations with Western Europe and the United States has been met. This approach has been described as ‘the return to Europe’. Membership in the European Union changed the Polish economy and the new politics opened up new opportunities for businesses and citizens. The aim of the article is to analyze the balance of the Polish membership in the European Union in the economic, financial, political and social dimensions.
- Topic:
- European Union, Partnerships, Finance, Economy, Exports, and Imports
- Political Geography:
- Europe and Poland
29. Sovereign Bond Purchases and Risk-Sharing Arrangements – Implications for Monetary Policy
- Author:
- Monika Blaszkiewicz
- Publication Date:
- 07-2015
- Content Type:
- Special Report
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- The design of the euro area Quantitative Easing (QE) programme raises the question of whether insufficient liquidity in the bond markets will reduce the impact of the programme and lead to market volatility. While estimates suggests that scarcity of around €102 billion may arise over the life of the programme, to date the QE programme has met its monthly targets and bond market volatility has been managed. Questions also arise in respect of the fact that risk is not fully shared on up to €738.4 billion to be purchased over the life of the programme. Partial risk sharing raises the spectre of defaulting central banks exiting the euro system, and existing members being unwilling to bear associated costs, and thus the future of the euro area. However, estimations suggest that, at present, all national central banks should be able to bare losses stemming from sovereign debt purchases under the current round of QE. This report was prepared within a research project entitled Sovereign bond purchases and risk sharing arrangements: Implications for euro-area monetary policy, which received funding from the European Parliament.
- Topic:
- Finance, Economic growth, Banks, Trade, and European Central Bank
- Political Geography:
- Europe and European Union
30. Revisiting the Latvian and Greek Financial Crises: The Benefits of Front-Loading Fiscal Adjustment
- Author:
- Anders Åslund
- Publication Date:
- 05-2015
- Content Type:
- Special Report
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- This paper discusses why Greece has done so poorly in comparison with all other European Union countries since the onslaught of the global financial crisis in 2008. To show what was wrong with its fiscal adjustment, this paper compares Greece with the other European Union country that was hit be the most severe fiscal crisis, namely Latvia. The conclusion is that front-loaded fiscal adjustment works much better. Greek economic policy has been a popular topic among opinion writers, notably Nobel Prize winner and New York Times columnist Paul Krugman, who claimed that Greece suffered from austerity. Because of his prominence in the international public debate, I shall scrutinize his arguments on the Greek crisis. The paper also examines what policy the International Monetary Fund has pursued with regard to Greece, and how its views have been influenced by the debate and Greek economic developments. Finally, the paper assesses what lessons can be drawn from the contrasting experiences of Latvia and Greece. The conclusion is that a fiscal adjustment should be sufficient to resolve the crisis to restore confidence and that it should be as front-loaded as is practically and politically possible.
- Topic:
- Financial Crisis, Finance, Economic growth, Macroeconomics, Fiscal Policy, and Trade
- Political Geography:
- Europe, Eastern Europe, Greece, and Latvia
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