Pensions and Growth: A Cointegration Analysis

This article investigates the long-term relationship between economic growth and old-age provision using time series analysis, particularly the techniques of cointegration. The neoclassical growth model by Solow (1956) provides atheoretical basis for the empirical analysis. The results are based onquarterly data from 1970 to 2013 for the US-economy. In this work, the existence of a cointegrating relation between economic growth and pensions is verified by use of scientifically accepted statistical methods and proven for historical US-data. The empirical analysis confirms that improved technological capabilities constitute a very important determinant of growth in the context of neoclassical theory. The effects within the cointegrated relationship cannot be determined at this point and there is no information if the effect is reciprocal or not. For this purpose, further investigations are necessary and can build on the results presented here.