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Aging, Retirement, and Savings: A General Equilibrium Analysis

  • Kulish Mariano

    ()

    (Reserve Bank of Austrlia)

  • Kent Christopher

    ()

    (Reserve Bank of Australia)

  • Smith Kathryn

    ()

    (Department of Climate Change and Energy Efficiency)

We study some economic consequences of aging in a general equilibrium overlapping generations model in which agents make optimal retirement decisions. The transitional dynamics of the economy are sensitive to the nature of the aging process, that is, the balance of declining fertility and rising longevity. Population aging unambiguously increases capital intensity in the long-run, but a rise in longevity that improves the health of the population will delay retirement and consequently decrease capital intensity in the short-run. The joint long-run effect of declining fertility and rising longevity on capital intensity is more than additive.

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Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 10 (2010)
Issue (Month): 1 (July)
Pages: 1-32

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Handle: RePEc:bpj:bejmac:v:10:y:2010:i:1:n:18
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  1. David E. Bloom & David Canning & Bryan Graham, 2003. "Longevity and Life-cycle Savings," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 319-338, 09.
  2. Axel Boersch-Supan & Alexander Ludwig & Joachim Winter, 2005. "Aging, Pension Reform, and Capital Flows: A Multi-Country Simulation Model," NBER Working Papers 11850, National Bureau of Economic Research, Inc.
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  5. Fogel, Robert W., 1993. "Economic Growth, Population Theory, and Physiology: The Bearing of Long-Term Processes on the Making of Economic Policy," Nobel Prize in Economics documents 1993-1, Nobel Prize Committee.
  6. Miles, David K, 1997. "Modelling the Impact of Demographic Change Upon the Economy," CEPR Discussion Papers 1762, C.E.P.R. Discussion Papers.
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  8. James M. Poterba, 2001. "Demographic Structure And Asset Returns," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 565-584, November.
  9. Robin Brooks, 2002. "Asset-Market Effects of the Baby Boom and Social-Security Reform," American Economic Review, American Economic Association, vol. 92(2), pages 402-406, May.
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