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Policy reforms and growth in computable OLG economies

  • Bouzahzah, Mohamed
  • De la Croix, David
  • Docquier, Frederic

We build a computable general equilibrium model with overlapping generations of agents and an endogenous growth specification à la Lucas. Two main issues are addressed: (i) to what extent does endogenous growth play a significant role in the face of policy reform and (ii) are the simulation results robust to various calibrations of the production function of human capital. In this purpose, we simulate four large policy changes and compare the predictions with endogenous growth (under various parameter sets) to those with exogenous growth. If endogenous growth is important when examining the effects of education reform, it does not really matter with pension reforms and plays a minor role in the debt repayment scenario. These results are very robust to calibration.

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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 26 (2002)
Issue (Month): 12 (October)
Pages: 2093-2113

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Handle: RePEc:eee:dyncon:v:26:y:2002:i:12:p:2093-2113
Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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  1. DOCQUIER, Frédéric & MICHEL, Philippe, 1994. "Education Subsidies and Endogenous Growth : Implications of Demographic Shocks," CORE Discussion Papers 1994052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Broer, D Peter & Westerhout, Ed W M T & Bovenberg, A Lans, 1994. " Taxation, Pensions and Saving in a Small Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(3), pages 403-24.
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  16. Laurence J. Kotlikoff & Kent Smetters & Jan Walliser, 1999. "Privatizing Social Security in the U.S. -- Comparing the Options," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(3), pages 532-574, July.
  17. Alan J. Auerbach & Laurence J. Kotlikoff & Robert P. Hagemann & Giuseppe Nicoletti, 1989. "The Economic Dynamics of an Ageing Population: The Case of Four OECD Countries," OECD Economics Department Working Papers 62, OECD Publishing.
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  19. Hendricks, Lutz A., 1999. "Taxation and Long-Run Growth," Staff General Research Papers 11933, Iowa State University, Department of Economics.
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