Pension funds investment and economic growth
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Keywords
Pension reform ; Pension funds investment ; Economic growthAbstract
During the recent decades pension fund assets are facing a significant growth due to the general shift of policy makers from the traditional define benefit scheme to define contribution scheme. Countries are facing difficulties managing their pension liabilities mainly from population ageing (United Nations, 2017) and from decreasing fertility rates that occurred worldwide, on a total of 50% decline for the last 70 years (World Economic Forum, 2022). To face these demographic changes, countries are heading towards structural reforms, implementing more sustainable funded or semi-funded pension systems than the PAYG system as they used to. The main purpose of this research is to investigate whether there is a link between the increasing trend in pension funds investment due to their increased assets under management and real economic growth in the OECD countries. To determine if there is statistical significance between the two parameters, we retrieved historical observations of all 38 OECD member countries over the period of 2006-2021. Several econometrical tools are implemented in order to exploit whether a positive relation exists between these two variables overtime.