Indeterminacy, intergenerational redistribution, endogenous longevity and human capital accumulation
AbstractThis paper sets up an OLG economy with endogenous life expectancy to study how fiscal policy that redistributes between generations can open the door to sunspot equilibria. Agents invest independently in their own human capital, produce and consume output, and receive a pension upon retirement. The model produces an expectations coordination problem that can explain significant differences in growth paths followed by otherwise identical countries. In particular, we show that our economy may be characterised by local indeterminacy of dynamic equilibria, and hence feature fluctuations which are driven by extrinsic uncertainty.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Dynamics and Control.
Volume (Year): 31 (2007)
Issue (Month): 2 (February)
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Web page: http://www.elsevier.com/locate/jedc
Other versions of this item:
- Giam Pietro Cipriani & Miltiadis Makris, 2004. "Indeterminacy, intergenerational redistribution, endogenous longevity and human capital accumulation," Discussion Papers 0401, Exeter University, Department of Economics.
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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