DE LA CROIX, David () (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)) DOCQUIER, FrŽdŽric LIEGEOIS, Philippe
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We forecast income growth over the period 2000-2050 in the US, Canada, and France. To ground the forecasts on relationships that are as robust as possible to changes in the environment, we use a quantitative theoretical approach which consists in calibrating and simulating a general equilibrium model. Compared to existing studies, we allow for life uncertainty and migrations, use generational accounting 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 the 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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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number
2007043.
Find related papers by JEL classification: D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends and Forecasts O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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