On the Modeling of Pension Expenditures in Europe

Abstract

The purpose of this work is the modeling of public pension expenditures as percentage of cross domestic product (GDP) of various European countries. For this purpose, we proceed to locate, collect and analyze the factors which either on short term or on long term may have an impact on the shaping of this variable. By achieving that we are able to model the pension expenditures and make forecasts. The analysis focuses on 20 European countries for which a large amount of data are available including a set of 20 possible explanatory variables for the period 2001–2015.

Keywords:

• Pension expenditures
• modeling and forecasting
• generalized linear models
• principal component analysis

Acknowledgements

The authors wish to express their appreciation to the editor and two anonymous referees whose comments and suggestions improved both the quality and the presentation of the manuscript. This work was completed as part of the activities of the Laboratory of Statistics and Data Analysis of the University of the Aegean.

Notes

1 Ratio of the last salary to the first pension amount.

2 Ratio of the country’s average pension to the average salary.