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Effects of longevity and dependency rates on saving and growth: Evidence from a panel of cross countries

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Author Info
Hongbin Li
Junsen Zhang
Jie Zhang () (MRG - School of Economics, The University of Queensland)

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Abstract

While earlier empirical studies found a negative saving effect of old-age dependency rates without considering longevity, recent studies have found that longevity has a positive effect on growth without considering old-age dependency rates. In this paper, we first justify the related yet independent roles of longevity and old-age dependency rates in determining saving and growth by using a growth model that encompasses both neoclassical and endogenous growth models as special cases. Using panel data from a recent World Bank data set, we then find that the longevity effect is positive and the dependency effect is negative in savings and investment regressions. The estimates indicate that the differences in the demographic variables across countries or over time can well explain the differences in aggregate savings rates. We also find that both population age structure and life expectancy are important contributing factors to growth.

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Paper provided by School of Economics, University of Queensland, Australia in its series MRG Discussion Paper Series with number 1106.

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Handle: RePEc:qld:uqmrg6:11

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  3. Hongbin Li & Junsen Zhang, 2007. "Do High Birth Rates Hamper Economic Growth?," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 110-117, 01. [Downloadable!] (restricted)
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  24. Ehrlich, Isaac & Lui, Francis T, 1991. "Intergenerational Trade, Longevity, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1029-59, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michael Graff & Kam-Ki Tang & Jie Zhang, . "Demography, Financial Openness, National Savings and External Balance," MRG Discussion Paper Series 2008, School of Economics, University of Queensland, Australia. [Downloadable!]
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  2. John Janssen, 2002. "Long-term fiscal projections and their relationship with the intertemporal budget constraint: An application to New Zealand," Treasury Working Paper Series 02/05, New Zealand Treasury. [Downloadable!]
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