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Aging, Retirement, and Savings: A General Equilibrium Analysis

Author

Listed:
  • Kulish Mariano

    () (Reserve Bank of Austrlia)

  • Kent Christopher

    () (Reserve Bank of Australia)

  • Smith Kathryn

    () (Department of Climate Change and Energy Efficiency)

Abstract

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.

Suggested Citation

  • Kulish Mariano & Kent Christopher & Smith Kathryn, 2010. "Aging, Retirement, and Savings: A General Equilibrium Analysis," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-32, July.
  • Handle: RePEc:bpj:bejmac:v:10:y:2010:i:1:n:18
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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