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2020 ; 55
(3
): 138-149
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Public pension shortfalls and state economic growth: a preliminary examination
#MMPMID32836312
Steindel C
Bus Econ
2020[]; 55
(3
): 138-149
PMID32836312
show ga
Public pension funding problems may contribute to a state's poor economic
performance. This paper examines that proposition, using state-level data on
public pensions developed by the Pew Trust, and jointly by the Federal Reserve
Board and the Bureau of Economic Analysis. There is little evidence that measures
of the level of unfunded pension plan liabilities lead directly to a state's soft
economic performance, though growth in unfunded liabilities appear to be
associated with lower growth. While these results suggest that reductions in the
growth of a state's pension debt may be beneficial, they arguably do not imply
that dramatic action to reduce liabilities is necessarily called for. In that
regard, the implications are comparable to those of Lenney et al. (2019), that
suggest that reasonable goals for some presumed highly troubled systems are
stabilization of the ratio of their unfunded liabilities to their state's nominal
GDP, rather than outright elimination of the debt.