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In the 2009/2010 budget, the Australian government announced a major reform of the Australian pension system. Using a dynamic, general equilibrium model, we simulate the implications of the major changes of the reform: a higher maximum pension rate, changes to the income means test and an increase in the eligibility age. The simulation results show positive long-run effects of the reform on labour supply, output, consumption and the capital stock as well as reduced pension expenditures. The reform generates large short-run welfare gains for older generations of low- and middle-income households due primarily to the increased maximum pension. The reform is potentially Pareto improving, yielding a small aggregate efficiency gain.

The Australian age pension is somewhat unusual among developed countries in that it is means tested against both the claimant's income and assets. While means testing of age pensions facilitates the aims of directing public pensions to those senior individuals most in need and of containing pension expenditures by governments, it also has the effect of changing the incentives of individuals to work and save. This paper examines the implications of the Australian means tested age pension for incentives of individuals to save and work, for government financial commitments and for the welfare of individuals. To this end, we develop an overlapping generations model of the Australian economy that incorporates the essential features of the Australian pension, superannuation and taxation policy settings and use it to explore the implications of several hypothetical policy changes that relax the means test of the age pension. Our results confirm that the existing means-tested, age pension represents a disincentive for some older Australians to work.

Après le putsch communiste de février 1948, des dizaines de milliers de Tchécoslovaques ont fui en Occident. Plus de 1 600 d'entre eux ont ensuite combattu en Indochine dans les rangs de la Légion étrangère et près de 300 sont tombés. Pour nombre d'entre eux, il s'est agi d'un combat contre l'idéologie qui les avait chassés de leur patrie. Il s'est agi aussi du plus fort déploiement de Tchèques et de Slovaques après la Seconde Guerre mondiale et les Tchécoslovaques ont représenté plus de 2 % des effectifs légionnaires d'Indochine. Certains ont combattu et sont morts aussi pendant la deuxième guerre du Vietnam (sur huit au moins, trois sont tombés au combat).

© 2017 Elsevier Inc. We quantify the macroeconomic and welfare effects of alternative fiscal consolidation plans in the context of a small open economy. Using an overlapping generations model tailored to the Australian economy, we examine immediate and gradual eliminations of the existing fiscal deficit with (i) temporary income tax hikes, (ii) temporary consumption tax hikes and (iii) temporary transfer payment cuts. The simulation results indicate that all three fiscal measures result in favourable long-run macroeconomic and welfare outcomes, but have adverse consequences in the short run that are particularly severe under the immediate fiscal consolidation plan. Moreover, our results show that cutting transfer payments leads to the worst welfare outcome for all generations currently alive. Increasing the consumption tax rate results in smaller welfare losses, but compared to raising income taxes, the current poor households pay much larger welfare costs. The adverse effects on wellbeing of current generations highlight political constraints when implementing a fiscal consolidation plan. However, after compensating current generations for all welfare losses, there is still an overall efficiency gain. This implies possibilities to devise a fiscal consolidation plan supported by a compensation scheme to improve wellbeing of future generations.