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Ageing, government budgets, retirement, and growth
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
2012 (English)In: European Economic Review, ISSN 0014-2921, E-ISSN 1873-572X, Vol. 56, no 1, 97-115 p.Article in journal (Refereed) Published
Abstract [en]

We analyze the short and long-run effects of demographic ageing - increased longevity and reduced fertility - on per-capita growth. The OLG model captures direct effects, working through adjustments in the savings rate, labor supply, and capital deepening, and indirect effects, working through changes of taxes, government spending components and the retirement age in politico-economic equilibrium. Growth is driven by capital accumulation and productivity increases fueled by public investment. The closed-form solutions of the model predict taxation and the retirement age in OECD economies to increase in response to demographic ageing and per-capita growth to accelerate. If the retirement age was held constant, the growth rate in politico-economic equilibrium would essentially remain unchanged, due to a surge of social-security transfers and crowding out of public investment.

Place, publisher, year, edition, pages
2012. Vol. 56, no 1, 97-115 p.
Keyword [en]
Ageing, Government budgets, Retirement, Growth
National Category
Economics and Business
URN: urn:nbn:se:su:diva-76731DOI: 10.1016/j.euroecorev.2011.05.007ISI: 000299983900007OAI: diva2:527337
2Available from: 2012-05-20 Created: 2012-05-16 Last updated: 2012-05-20Bibliographically approved

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ReferencesLink to record
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