Growth and the Ageing Joneses
AbstractWe incorporate Keeping-up-with-the-Joneses (KUJ) preferences into the Blanchard-Yaari (BY) framework and develop, using an AK technology, a model of balanced growth. In this context we investigate status preference, demographic, and pension policy shocks. We find that a higher degree of KUJ lowers economic growth, while, in contrast, a decrease in the fertility and mortality rates increase it. In the second part of the paper we extend the model by incorporating a Pay-as-you-go (PAYG) pension system with a statutory retirement date. This introduces a life-cycle in human wealth earnings and implies that the growth rate is higher under PAYG. We also consider the implications of an increase in the retirement date under both defined benefit and defined contribution schemes.
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Bibliographic InfoPaper provided by Institute for Advanced Studies in its series Economics Series with number 230.
Length: 24 pages
Date of creation: Nov 2008
Date of revision:
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Other versions of this item:
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
This paper has been announced in the following NEP Reports:
- NEP-AGE-2008-12-01 (Economics of Ageing)
- NEP-ALL-2008-12-01 (All new papers)
- NEP-DGE-2008-12-01 (Dynamic General Equilibrium)
- NEP-MAC-2008-12-01 (Macroeconomics)
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