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How powerful is demography ? The Serendipity Theorem revisited

  • DE LA CROIX, David

    ()

    (Université catholique de Louvain, CORE and IRES, B-1348 Louvain-la-Neuve, Belgium)

  • PESTIEAU, Pierre

    ()

    (Université catholique de Louvain, CORE and IRES, B-1348 Louvain-la-Neuve, Belgium)

  • PONTHIERE, Gregory

    ()

    (Paris School of Economics and Ecole Normale Supérieure, Paris, France)

Introduced by Samuelson (1975), the Serendipity Theorem states that the competitive economy will converge towards the optimum steady-state provided the optimum population growth rate is imposed. This paper aims at exploring whether the Serendipity Theorem still holds in an economy with risky lifetime. We show that, under general conditions, including a perfect annuity market with actuarially fair return, imposing the optimum fertility rate and the optimum survival rate leads the competitive economy to the optimum steady-state. That Extended Serendipity Theorem is also shown to hold in economies where old adults work some fraction of the old-age, whatever the retirement age is fixed or chosen by the agents

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2009076.

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Date of creation: 01 Dec 2009
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Handle: RePEc:cor:louvco:2009076
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  1. MICHEL, Philippe & PESTIEAU, Pierre, . "Population growth and optimality. When does serendipity hold?," CORE Discussion Papers RP 1072, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. David De La Croix & Grégory Ponthière, 2008. "On the Golden Rule of capital accumulation under endogenous longevity," PSE Working Papers halshs-00586242, HAL.
  3. G. ABIO & Géraldine MAHIEU & C. Patxot, 2002. "On the Optimality of PAYG Pension Systems in an Endogenous Fertility Setting," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002006, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  4. Pierre-André Jouvet & Pierre Pestieau & Grégory Ponthière, 2007. "Longevity and environmental quality in an OLG model," EconomiX Working Papers 2007-19, University of Paris West - Nanterre la Défense, EconomiX.
  5. Oded_Galor & Omer Moav, 2004. "Natural Selection and the Evolution of Life Expectancy," Working Papers 2004-14, Brown University, Department of Economics.
  6. Tomas J. Philipson & Gary S. Becker, 1998. "Old-Age Longevity and Mortality-Contingent Claims," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 551-573, June.
  7. David de la Croix & Omar Licandro, 2013. "The Child is Father Of the Man: Implications for the Demographic Transition," Economic Journal, Royal Economic Society, vol. 123(567), pages 236-261, 03.
  8. Grégory Ponthière, 2009. "Rectangularization and the rise in limit longevity in a simple overlapping generations model," Post-Print halshs-00754324, HAL.
  9. Gemma Abio Roig, 2003. "Interiority of the Optimal Population Growth Rate with Endogenous Fertility," Working Papers in Economics 96, Universitat de Barcelona. Espai de Recerca en Economia.
  10. de la Croix, David & Mahieu, Géraldine & Rillaers, Alexandra, 2000. "How should retirement policy adjust to the baby bust ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  11. Matthias Doepke, 2004. "Accounting for Fertility Decline During the Transition to Growth," Journal of Economic Growth, Springer, vol. 9(3), pages 347-383, 09.
  12. Samuelson, Paul A, 1975. "The Optimum Growth Rate for Population," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 531-38, October.
  13. Hu, Sheng Cheng, 1979. "Social Security, the Supply of Labor, and Capital Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 274-83, June.
  14. Klaus Jaeger & Wolfgang Kuhle, 2009. "The optimum growth rate for population reconsidered," Journal of Population Economics, Springer, vol. 22(1), pages 23-41, January.
  15. Shankha Chakraborty, 2002. "Endogenous Lifetime and Economic Growth," University of Oregon Economics Department Working Papers 2002-03, University of Oregon Economics Department, revised 26 Jan 2002.
  16. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, number 9780521001151.
  17. Jeffrey R. Brown, 2007. "Rational and Behavioral Perspectives on the Role of Annuities in Retirement Planning," NBER Working Papers 13537, National Bureau of Economic Research, Inc.
  18. Blackburn, Keith & Cipriani, Giam Pietro, 2002. "A model of longevity, fertility and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(2), pages 187-204, February.
  19. repec:ebl:ecbull:v:10:y:2003:i:4:p:1-7 is not listed on IDEAS
  20. DE LA CROIX, David & MAHIEU, Géraldine & RILLAERS, Alexandra, . "How should the allocation of resources adjust to the baby bust?," CORE Discussion Papers RP 1741, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  21. Deardorff, Alan V, 1976. "The Optimum Growth Rate for Population: Comment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 510-15, June.
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