We compare the long-term output and current account effects of pension reforms that increase the retirement age with those of reforms that cut pension benefits, conditional on reforms achieving similar fiscal targets. We show the existence of a policy trade-off. Pension reforms that increase the retirement age have a large expansionary effect on output, but a small (and oftentimes worsening) effect on the current account. In contrast, reforms that cut pension benefits improve the current account balance but reduce output. We also show that mixed pension reforms that extend the working life and cut pension benefits can simultaneously boost output and improve the current account.

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