Pensions and growth within a Stock–Flow Consistent Supermultiplier Model

Pensions and growth within a Stock–Flow Consistent Supermultiplier Model | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Pensions and growth within a Stock–Flow Consistent Supermultiplier Model JOSE PEREZ-MONTIEL, ESTEBAN CRUZ-HIDALGO, STUART MEDINA-MILTIMORE This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9212871/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted 5 You are reading this latest preprint version Abstract We develop a parsimonious stock–flow consistent supermultiplier model (SSM–SFC) in which public pensions act as an engine of demand-led growth. In the model, growth is driven by government autonomous expenditure, which takes the form of transfers to retired households rather than direct public purchases of goods and services. The numerical simulations reproduce the main properties of supermultiplier growth models. First, the rate of capacity utilisation converges towards its normal level. Second, changes in income distribution affect the level of economic activity and transitional dynamics but do not alter the long-run growth rate. Third, the growth rate of pension transfers determines the long-run growth rate of output. In addition, the model delivers several novel results. A permanent increase in the growth rate of pension transfers raises the long-run growth rate of output and improves public debt dynamics, as faster economic growth stabilises the debt-to-output ratio despite higher transfer payments. Changes in functional income distribution, such as an increase in the wage share, strengthen effective demand and improve the pension pressure ratio by expanding the contribution base. When both mechanisms operate simultaneously, pension expansion and redistributive changes reinforce each other, leading to higher growth, improved fiscal ratios and a stable balanced-growth path. Overall, the results suggest that within a stock–flow consistent supermultiplier framework, public pensions can act not only as a redistributive mechanism but also as a structural driver of demand and growth without compromising fiscal sustainability. Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Under Review Version 1 posted Reviewers agreed at journal 20 Apr, 2026 Reviewers invited by journal 20 Apr, 2026 Editor assigned by journal 31 Mar, 2026 Submission checks completed at journal 31 Mar, 2026 First submitted to journal 24 Mar, 2026 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9212871","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":626333768,"identity":"2aa1d1b2-94c0-480b-b6b5-d8c135d4d375","order_by":0,"name":"JOSE PEREZ-MONTIEL","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA0klEQVRIiWNgGAWjYBACxgY4k/kAQ2IDToVYtbAlEKcFCfAYIBuAGzC3tz98wLjDJp+f/8w3iYc7GOTkCWlj7DljbMB4Js1yZsPZbRKJZxiMDQ4Q0jIjh02Cse2wgcHBXqCWNobEDYQcxjgj/fkPxrb/BvaHeZ6BtNTPJ+iwGQlmDIxtBwwM2HjYQFoSGAg6DOgXoBeSDSTOsBlbJJ6RMNxASIshMMQ+fNxhZ8Dff/jhzZ87bOQJhpghSAFSDEoQUA8E8mDXETJ4FIyCUTAKRjYAACT6P0XRPMNvAAAAAElFTkSuQmCC","orcid":"","institution":"University of the Balearic Islands","correspondingAuthor":true,"prefix":"","firstName":"JOSE","middleName":"","lastName":"PEREZ-MONTIEL","suffix":""},{"id":626333772,"identity":"54c4448d-b382-4743-b923-5569d2b39564","order_by":1,"name":"ESTEBAN CRUZ-HIDALGO","email":"","orcid":"","institution":"University of Seville","correspondingAuthor":false,"prefix":"","firstName":"ESTEBAN","middleName":"","lastName":"CRUZ-HIDALGO","suffix":""},{"id":626333776,"identity":"108035f7-4779-4467-9ff7-28b40473e08f","order_by":2,"name":"STUART MEDINA-MILTIMORE","email":"","orcid":"","institution":"University of Extremadura","correspondingAuthor":false,"prefix":"","firstName":"STUART","middleName":"","lastName":"MEDINA-MILTIMORE","suffix":""}],"badges":[],"createdAt":"2026-03-24 13:54:40","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-9212871/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9212871/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":108181418,"identity":"9f2e7ede-e2f6-4bab-ba5c-c2a644c0483a","added_by":"auto","created_at":"2026-04-30 08:58:38","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":458425,"visible":true,"origin":"","legend":"","description":"","filename":"Anonymousmanuscript.REPE.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9212871/v1_covered_22ac027d-8233-4b57-bfe1-a675a6ad2f7f.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Pensions and growth within a Stock–Flow Consistent Supermultiplier Model","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"review-of-evolutionary-political-economy","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"repe","sideBox":"Learn more about [Review of Evolutionary Political Economy](https://link.springer.com/journal/43253)","snPcode":"43253","submissionUrl":"https://submission.springernature.com/new-submission/43253/3","title":"Review of Evolutionary Political Economy","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"stoa","reportingPortfolio":"Springer Hybrid","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"","lastPublishedDoi":"10.21203/rs.3.rs-9212871/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-9212871/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eWe develop a parsimonious stock\u0026ndash;flow consistent supermultiplier model (SSM\u0026ndash;SFC) in which public pensions act as an engine of demand-led growth. In the model, growth is driven by government autonomous expenditure, which takes the form of transfers to retired households rather than direct public purchases of goods and services. The numerical simulations reproduce the main properties of supermultiplier growth models. First, the rate of capacity utilisation converges towards its normal level. Second, changes in income distribution affect the level of economic activity and transitional dynamics but do not alter the long-run growth rate. Third, the growth rate of pension transfers determines the long-run growth rate of output. In addition, the model delivers several novel results. A permanent increase in the growth rate of pension transfers raises the long-run growth rate of output and improves public debt dynamics, as faster economic growth stabilises the debt-to-output ratio despite higher transfer payments. Changes in functional income distribution, such as an increase in the wage share, strengthen effective demand and improve the pension pressure ratio by expanding the contribution base. When both mechanisms operate simultaneously, pension expansion and redistributive changes reinforce each other, leading to higher growth, improved fiscal ratios and a stable balanced-growth path. Overall, the results suggest that within a stock\u0026ndash;flow consistent supermultiplier framework, public pensions can act not only as a redistributive mechanism but also as a structural driver of demand and growth without compromising fiscal sustainability.\u003c/p\u003e","manuscriptTitle":"Pensions and growth within a Stock–Flow Consistent Supermultiplier Model","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2026-04-28 14:55:49","doi":"10.21203/rs.3.rs-9212871/v1","editorialEvents":[{"type":"communityComments","content":0},{"type":"reviewerAgreed","content":"48388755924429059051419205036429872264","date":"2026-04-20T13:06:22+00:00","index":"hide","fulltext":""},{"type":"reviewersInvited","content":"","date":"2026-04-20T09:24:51+00:00","index":"","fulltext":""},{"type":"editorAssigned","content":"","date":"2026-03-31T14:30:16+00:00","index":"","fulltext":""},{"type":"checksComplete","content":"","date":"2026-03-31T14:29:17+00:00","index":"","fulltext":""},{"type":"submitted","content":"Review of Evolutionary Political Economy","date":"2026-03-24T13:37:49+00:00","index":"","fulltext":""}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"review-of-evolutionary-political-economy","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"repe","sideBox":"Learn more about [Review of Evolutionary Political Economy](https://link.springer.com/journal/43253)","snPcode":"43253","submissionUrl":"https://submission.springernature.com/new-submission/43253/3","title":"Review of Evolutionary Political Economy","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"stoa","reportingPortfolio":"Springer Hybrid","inReviewEnabled":true,"inReviewRevisionsEnabled":false}}],"origin":"","ownerIdentity":"c2d8fc8f-d9ed-4b25-bed3-8ae045df6424","owner":[],"postedDate":"April 28th, 2026","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"under-review","subjectAreas":[],"tags":[],"updatedAt":"2026-04-28T14:55:49+00:00","versionOfRecord":[],"versionCreatedAt":"2026-04-28 14:55:49","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-9212871","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-9212871","identity":"rs-9212871","version":["v1"]},"buildId":"XKTyCvWXoU3ODBz1xrDgd","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}