Volume 44, Number 173,
April-June 2013
Automatic Stabilization and Social Security:
Brazil, Mexico, Costa Rica and Chile
Eloy Fisher
RESULTS ( ...continuation )

Regarding benefits, these systems behave a-cyclically and thus on the net level, these programs tend to act as important sources of stabilization. Additionally, the net effects of inflation are insignificant because the effects between the collection of contributions and the expenditures on benefits cancel out. The most robust estimate using the Anderson-Hsiao procedure entirely eliminates the effects of inflation.


The objective of this work was to determine the stabilizing effect of contributory social security programs in Brazil, Mexico and Costa Rica and the pasis pension system in Chile. Regarding the raising of funds, these three programs respond to economic cycles, although they behave a-cyclically in the expenditure of benefits. The pasis has a low reaction to economic cycles, because its benefits are established by law and its funds are set by the central government. Furthermore, the range of high episodes of inflation does not seem to bring about net effects on the real flows in these programs.

Although program benefits do not react to economic cycles, minimizing the traction of these programs as real sources of stabilization, the results suggest that it is perhaps necessary to take a closer look at pension and social security systems as levers that can contribute to economic stabilization and therefore serve broader social purposes. When reforming these programs, priority should be given not only to guaranteeing their solvency but also on their increasing impact on macroeconomic cycles in a country, with positive effects for aggregate demand and the labor market. In this way, these programs may mitigate some of the adverse effects of labor market recessions in the region.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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