Abstract
The current level of pension provision in Ukraine does not allow a decent life for citizens in retirement. Most of the problems in this area are related to the lack of a scientifically sound social development strategy as a guide for the development of legislation. The aim of this paper is to develop an OLG model of the Ukrainian economy that can be used to study the fiscal effects of demographic changes and to quantify the welfare effects of some currently discussed pension reform proposals. The main factors that hinder the progress of pension reform and adversely affect the functioning of the Ukrainian pension system are demographic changes toward aging of population, labor supply shortage, and capital stock destructions caused by war. The approach to economic modeling is based on an overlapping generation (OLG) model. This paper makes a first attempt to simulate the state of the Ukrainian pension system and economy in the future, taking into account the effects of the proposed reforms of the pension system and excluding the impact of the war and the various forms of support for other countries’ economies. As a result, in this study were simulated and evaluated different scenarios for the Ukrainian pension and fiscal system. The main focus is on modeling various demographic scenarios and the resulting implications for overall economic and fiscal development.