The paper develops a general equilibrium model calibrated to the US to quantify the effects of pension reforms on the natural interest rate, that is the level of the real interest rate compatible with potential output and stable prices.
Between 1970 and 2015, pension reforms mitigated the secular decline in the natural interest rate overall, raising it by around one percentage point and thus counteracting the downward pressure from adverse demographic and productivity patterns. As regards the future, given the demographic projections between 2015 and 2060, the effects of alternative pension reforms on the interest rate and on welfare depend on the evolution of productivity.
