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Long-Run Biological Interest Rate for Pay-As-You-Go Pensions in Advanced and Developing Countries
IMF Working Papers
How much of an internal rate of return would a sustainable pay-as-you-go pension system offer current and future generations equally? The answer is the sum of the Long-Run Biological Interest Rates (LBIR), the real-world equivalent of Samuelson's (1958) biological interest rate, and future productivity growth. Reflecting global population ageing, the median LBIR across 172 countries is as low as 1 percent per year. The LBIRs are particularly low in advanced countries, estimated to be negativedoi:10.5089/9781475595826.001 fatcat:6vqdho7rwbdxzp6ec3tyyp7btu