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Income growth in the 21st century: Forecasts with an overlapping generations model

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  • de la Croix, David
  • Docquier, Frederic
  • Liegeois, Philippe

Abstract

We forecast income growth over the periode 2000-2050 in the US, Canada, and France. To ground the forecasts on relationships that are as robust as possible t changes in the environment, we use a quantitative theoretical approach which consists in calibrating and simulating a general equilibrium model. Compared to existing studies to link taxes and public expenditures to demographic changes, and take into account the interaction between education and work experience. Forecasts show that growth will be weaker over the period 2010-2040. The gap between the US and the two other countries is increasing over time. France will catch-up and overtake Canada in 2020. Investigating alternative policy scenarios, we show that increasing the effective retirement age to 63 would be most profitable for France, reducing its gap with US by one third. A decrease in social security benefits would slightly stimulate growth but would have no real impact on the gap between the countries.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Forecasting.

Volume (Year): 23 (2007)
Issue (Month): 4 ()
Pages: 621-635

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Handle: RePEc:eee:intfor:v:23:y:2007:i:4:p:621-635

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Web page: http://www.elsevier.com/locate/ijforecast

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  1. BOUZAHZAH, Mohamed & DE LA CROIX, David & DOCQUIER, Frédéric, . "Policy reforms and growth in computable OLG economies," CORE Discussion Papers RP -1669, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Cited by:
  1. de la CROIX, David & PIERRARD, Olivier & SNEESSENS, Henri R., . "Aging and pensions in general equilibrium: labor market imperfections matter," CORE Discussion Papers RP -2495, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Olivier Pierrard & Henri R. Sneessens & David de la Croix, 2010. "Ageing, Pensions and The Labour Market," 2010 Meeting Papers 779, Society for Economic Dynamics.
  3. Xavier Chojnicki & Frédéric Docquier & Lionel Ragot, 2011. "Should the US have locked heaven’s door?," Journal of Population Economics, Springer, vol. 24(1), pages 317-359, January.
  4. Marchiori, Luca, 2011. "Demographic trends and international capital flows in an integrated world," Economic Modelling, Elsevier, vol. 28(5), pages 2100-2120, September.
  5. Luca Marchiori & Patrice Pieretti & Benteng Zou, 2010. "The impact of migration on origin countries: a numerical analysis," CREA Discussion Paper Series 10-06, Center for Research in Economic Analysis, University of Luxembourg.

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