IDEAS home Printed from https://ideas.repec.org/p/cbo/wpaper/44941.html
   My bibliography  Save this paper

Fiscal Policy Effects in a Heterogeneous-Agent Overlapping-Generations Economy With an Aging Population: Working Paper 2013-07

Author

Listed:
  • Shinichi Nishiyama

Abstract

Among the models that CBO uses to analyze the economic effects of changes in federal fiscal policy is a life-cycle growth model with overlapping generations of heterogeneous households. In this paper, we extend a similar dynamic model by incorporating a population that ages in a manner consistent with projections for the United States. Under that extension, gross domestic product per capita is projected to be about 7 percent lower in 2040, and more than 11 percent lower in the long run, if the government cuts transfer rates and increases income taxes to finance the

Suggested Citation

  • Shinichi Nishiyama, 2013. "Fiscal Policy Effects in a Heterogeneous-Agent Overlapping-Generations Economy With an Aging Population: Working Paper 2013-07," Working Papers 44941, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:44941
    as

    Download full text from publisher

    File URL: https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/workingpaper/44941-Nishiyama_1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Congressional Budget Office, 2013. "The Distribution of Federal Spending and Taxes in 2006," Reports 44698, Congressional Budget Office.
    2. Shinichi Nishiyama, 2019. "The joint labor supply decision of married couples and the U.S. Social Security pension system," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 277-304, January.
    3. Congressional Budget Office, 2012. "The Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 42905, Congressional Budget Office.
    4. Congressional Budget Office, 2012. "Updated Budget Projections: Fiscal Years 2012 to 2022," Reports 43119, Congressional Budget Office.
    5. Nishiyama, Shinichi, 2011. "The budgetary and welfare effects of tax-deferred retirement saving accounts," Journal of Public Economics, Elsevier, vol. 95(11), pages 1561-1578.
    6. Congressional Budget Office, 2012. "An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 43539, Congressional Budget Office.
    7. Congressional Budget Office, 2012. "The Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 42905, Congressional Budget Office.
    8. Congressional Budget Office, 2013. "Updated Budget Projections: Fiscal Years 2013 to 2023," Reports 44172, Congressional Budget Office.
    9. Shinichi Nishiyama & Kent Smetters, 2007. "Does Social Security Privatization Produce Efficiency Gains?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1677-1719.
    10. Congressional Budget Office, 2013. "The Budget and Economic Outlook: Fiscal Years 2013 to 2023," Reports 43907, Congressional Budget Office.
    11. Congressional Budget Office, 2012. "An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 43539, Congressional Budget Office.
    12. Congressional Budget Office, 2013. "Updated Budget Projections: Fiscal Years 2013 to 2023," Reports 44172, Congressional Budget Office.
    13. Congressional Budget Office, 2012. "The Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 42905, Congressional Budget Office.
    14. Felix Reichling & Charles Whalen, 2012. "Review of Estimates of the Frisch Elasticity of Labor Supply: Working Paper 2012-13," Working Papers 43676, Congressional Budget Office.
    15. Congressional Budget Office, 2012. "The 2012 Long-Term Budget Outlook," Reports 43288, Congressional Budget Office.
    16. Juan Carlos Conesa & Sagiri Kitao & Dirk Krueger, 2009. "Taxing Capital? Not a Bad Idea after All!," American Economic Review, American Economic Association, vol. 99(1), pages 25-48, March.
    17. Huggett, Mark, 1996. "Wealth distribution in life-cycle economies," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 469-494, December.
    18. Congressional Budget Office, 2012. "The Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 42905, Congressional Budget Office.
    19. Congressional Budget Office, 2012. "An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 43539, Congressional Budget Office.
    20. Shinichi Nishiyama, 2004. "Analyzing an Aging Population--A Dynamic General Equilibrium Approach: Technical Paper 2004-03," Working Papers 15191, Congressional Budget Office.
    21. Congressional Budget Office, 2012. "The 2012 Long-Term Budget Outlook," Reports 43288, Congressional Budget Office.
    22. Shinichi Nishiyama, 2003. "Analyzing Tax Policy Changes Using a Stochastic OLG Model with Heterogeneous Households: Technical Paper 2003-12," Working Papers 15112, Congressional Budget Office.
    23. Gouveia, Miguel & Strauss, Robert P., 1994. "Effective Federal Individual Tax Functions: An Exploratory Empirical Analysis," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(2), pages 317-339, June.
    24. Congressional Budget Office, 2013. "The Distribution of Federal Spending and Taxes in 2006," Reports 44698, Congressional Budget Office.
    25. Congressional Budget Office, 2012. "The 2012 Long-Term Budget Outlook," Reports 43288, Congressional Budget Office.
    26. Shinichi Nishiyama, 2002. "Bequests, Inter Vivos Transfers, and Wealth Distribution," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 892-931, October.
    27. Congressional Budget Office, 2013. "Updated Budget Projections: Fiscal Years 2013 to 2023," Reports 44172, Congressional Budget Office.
    28. Congressional Budget Office, 2013. "The Distribution of Federal Spending and Taxes in 2006," Reports 44698, Congressional Budget Office.
    29. Congressional Budget Office, 2013. "The Budget and Economic Outlook: Fiscal Years 2013 to 2023," Reports 43907, Congressional Budget Office.
    30. Congressional Budget Office, 2012. "The Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 42905, Congressional Budget Office.
    31. Congressional Budget Office, 2012. "The 2012 Long-Term Budget Outlook," Reports 43288, Congressional Budget Office.
    32. Congressional Budget Office, 2013. "The Budget and Economic Outlook: Fiscal Years 2013 to 2023," Reports 43907, Congressional Budget Office.
    33. Gouveia, Miguel & Strauss, Robert P., 1994. "Effective Federal Individual Tax Functions: An Exploratory Empirical Analysis," National Tax Journal, National Tax Association, vol. 47(2), pages 317-39, June.
    34. Shinichi Nishiyama & Kent Smetters, 2005. "Consumption Taxes and Economic Efficiency with Idiosyncratic Wage Shocks," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 1088-1115, October.
    35. Congressional Budget Office, 2013. "Updated Budget Projections: Fiscal Years 2013 to 2023," Reports 44172, Congressional Budget Office.
    36. Juan C. Conesa & Dirk Krueger, 1999. "Social Security Reform with Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(4), pages 757-795, October.
    37. Congressional Budget Office, 2012. "An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022," Reports 43539, Congressional Budget Office.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Felix Reichling & Shinichi Nishiyama, 2015. "The Costs to Different Generations of Policies That Close the Fiscal Gap: Working Paper 2015-10," Working Papers 51097, Congressional Budget Office.
    2. Georges, Patrick & Seçkin, Aylin, 2016. "From pro-natalist rhetoric to population policies in Turkey? An OLG general equilibrium analysis," Economic Modelling, Elsevier, vol. 56(C), pages 79-93.
    3. Kudrna, George & Tran, Chung & Woodland, Alan, 2019. "Facing Demographic Challenges: Pension Cuts Or Tax Hikes?," Macroeconomic Dynamics, Cambridge University Press, vol. 23(2), pages 625-673, March.
    4. Jonathan Huntley, 2014. "The Long-Run Effects of Federal Budget Deficits on National Saving and Private Domestic Investment: Working Paper 2014-02," Working Papers 45140, Congressional Budget Office.
    5. Eren, Okan & Genç İleri, Şerife, 2022. "Life cycle analysis of savings accounts with matching contributions," Economic Modelling, Elsevier, vol. 116(C).
    6. Kudrna, George & Tran, Chung & Woodland, Alan, 2015. "The dynamic fiscal effects of demographic shift: The case of Australia," Economic Modelling, Elsevier, vol. 50(C), pages 105-122.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Murphy, Robert G., 2014. "Explaining inflation in the aftermath of the Great Recession," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 228-244.
    2. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2012. "Has Economic Policy Uncertainty Hampered the Recovery?," Book Chapters, in: Lee E. Ohanian & John B. Taylor & Ian J. Wright (ed.), Government Policies and the Delayed Economic Recovery, chapter 3, Hoover Institution, Stanford University.
    3. Robert A. Moffitt, 2012. "The U.S. Employment-Population Reversal in the 2000s: Facts and Explanations," NBER Working Papers 18520, National Bureau of Economic Research, Inc.
    4. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2012. "Has Economic Policy Uncertainty Hampered the Recovery?," Book Chapters, in: Lee E. Ohanian & John B. Taylor & Ian J. Wright (ed.), Government Policies and the Delayed Economic Recovery, chapter 3, Hoover Institution, Stanford University.
    5. Jeffrey B. Liebman, 2013. "The Deterioration in the US Fiscal Outlook, 2001-2010," Tax Policy and the Economy, University of Chicago Press, vol. 27(1), pages 1-18.
    6. Neveu, Andre R., 2013. "Fiscal policy and business cycle characteristics in a heterogeneous agent macro model," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 224-240.
    7. Jeffrey S. Smith & James E. West, 2012. "Retirement Pay and Officer Retention," NBER Working Papers 18502, National Bureau of Economic Research, Inc.
    8. Laurence Seidman, 2013. "Medicare for All," Challenge, Taylor & Francis Journals, vol. 56(1), pages 88-115.
    9. Gary Clyde Hufbauer & Martin Vieiro, 2012. "Right Idea, Wrong Direction: Obama’s Corporate Tax Reform Proposals," Policy Briefs PB12-13, Peterson Institute for International Economics.
    10. Molly Dahl & Thomas DeLeire & Jonathan Schwabish & Timothy Smeeding, 2012. "The Earned Income Tax Credit and Expected Social Security Retirement Benefits Among Low-Income Women: Working Paper 2012-06," Working Papers 43033, Congressional Budget Office.
    11. Dimitri B. Papadimitriou & Greg Hannsgen & Gennaro Zezza, 2012. "Back to Business as Usual? Or a Fiscal Boost?," Economics Strategic Analysis Archive sa_apr_12, Levy Economics Institute.
    12. Michael Tanner, 2013. "The Patient Protection and Affordable Care Act: A Dissenting Opinion," Journal of Family and Economic Issues, Springer, vol. 34(1), pages 3-15, March.
    13. Laurence Seidman, 2013. "Overcoming the Fiscal Trilemma with Two Progressive Consumption Tax Supplements," Public Finance Review, , vol. 41(6), pages 824-851, November.
    14. Felix Reichling & Shinichi Nishiyama, 2015. "The Costs to Different Generations of Policies That Close the Fiscal Gap: Working Paper 2015-10," Working Papers 51097, Congressional Budget Office.
    15. David Greenlaw & James D. Hamilton & Peter Hooper & Frederic S. Mishkin, 2013. "Crunch Time: Fiscal Crises and the Role of Monetary Policy," NBER Working Papers 19297, National Bureau of Economic Research, Inc.
    16. William R. Cline, 2012. "Restoring Fiscal Equilibrium in the United States," Policy Briefs PB12-15, Peterson Institute for International Economics.
    17. David J. Stockton, 2013. "Fiscal Policy in the United States: Still in Need of a Strategy," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(02), pages 09-16, August.
    18. Ivan Kitov, 2012. "Why price inflation in developed countries is systematically underestimated," Papers 1206.0450, arXiv.org.
    19. Alan J. Auerbach, 2012. "Societal Aging: Implications for Fiscal Policy," IMES Discussion Paper Series 12-E-12, Institute for Monetary and Economic Studies, Bank of Japan.
    20. Stormy-Annika Mildner & Julia Howald, 2013. "Jumping the Fiscal Cliff: The Political Economy of Fiscal Policy-Making under President Obama," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(02), pages 17-24, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cbo:wpaper:44941. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/cbogvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.