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Growth, Pensions, And The Aging Joneses


  • Fisher, Walter H.
  • Heijdra, Ben J.


We incorporate keeping-up-with-the-Joneses (KUJ) preferences into the Blanchard–Yaari framework and develop a model of balanced growth. In this context we investigate status preference, demographic shocks, and pension policy. We find that a higher degree of KUJ lowers economic growth, whereas, 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. The latter implies that the growth rate is higher under PAYG. We also consider the implications of pension reform under both defined benefit and defined contribution schemes.

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  • Fisher, Walter H. & Heijdra, Ben J., 2012. "Growth, Pensions, And The Aging Joneses," Macroeconomic Dynamics, Cambridge University Press, vol. 16(1), pages 35-60, February.
  • Handle: RePEc:cup:macdyn:v:16:y:2012:i:01:p:35-60_00

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    Cited by:

    1. Castro, Gabriela & Maria, José R. & Félix, Ricardo Mourinho & Braz, Cláudia Rodrigues, 2017. "Aging And Fiscal Sustainability In A Small Euro Area Economy," Macroeconomic Dynamics, Cambridge University Press, vol. 21(7), pages 1673-1705, October.
    2. Cipriani, Giam Pietro, 2018. "Aging, Retirement, And Pay-As-You-Go Pensions," Macroeconomic Dynamics, Cambridge University Press, vol. 22(5), pages 1173-1183, July.

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