WHAT WE KNOW AND WHAT WE DO NOT KNOW ABOUT SOCIAL SECURITY FINANCE AND MACROECONOMIC STABILIZATION. EVIDENCE FROM EU COUNTRIES
WHAT WE KNOW AND WHAT WE DO NOT KNOW ABOUT SOCIAL SECURITY FINANCE AND MACROECONOMIC STABILIZATION. EVIDENCE FROM EU COUNTRIES

Summary/Abstract: This study examines those variables that affect social security finances and those that affect the macroeconomic situation in the EU countries with a view to enabling stability to be maintained under changing conditions. A retrospective analysis, the bootstrap panel Granger causality test, the Pesaran CD test for cross-sectional dependence in panels and Pesaran’s CIPs test for unit roots in panels were employed to this end. These methodological tools were applied to panel data of EU countries. The research period was from 2000 to 2019 inclusive. The results reveal that the inclusion of selected macroeconomic variables in the model that predicts the values of the components that shape social security finances, and vice versa, increases the accuracy of the prediction. It is confirmed that the studied variables have a mutually stabilizing effect. This is essential for increasing the adaptability of social security systems to changing conditions and ensuring the long-term stability of financing benefits. This discovery is what distinguishes this study from those conducted on general go- vernment finance; two-way causal relationships in this field have never before been verified.

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