Pension Reform in an Overlapping Generations Model with Heterogeneous Agents

<p>The current paper represents research about changing of pension system in the Russian Federation.&nbsp;</p><p>Current demographic situation makes the topic of pension system reform very important since the number of old people increases and the number of young ones decreases. This kind of change makes functioning of pension system more difficult and rises necessity of its reform.</p><p>The aim of the current research is to find an optimal pension system reform in the Russian Federation using an overlapping generations model. Following tasks were solved during the process of &nbsp;reaching the aim:</p><ul><li>scientific literature about pension system reform was intensively studied;</li><li>an overlapping generations model with heterogeneous agents for the Russian economy was created and calibrated, a steady state for the model was found;</li><li>the optimal pension system was found;&nbsp;</li><li>several transition paths were studied;</li><li>a Pareto optimal transition path was found.</li></ul><p>Overlapping generations models represents the main research method. The author created a model with heterogeneous agents which differentiate in efficiency level. The author proves that such agent classification makes sence.</p><p>The novelty of the current research consists in creating an overlapping generations model with heterogeneous agents for the Russian economy and finding a Pareto optimal transition path to the capital reserve pension system.</p><p>The main results of the paper include the fact that the best pension system for both agent types is capital reserve system and that a Pareto optimal transition path with pension fund debt is possible.</p>