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Indeterminacy, intergenerational redistribution, endogenous longevity and human capital accumulation

Author

Listed:
  • Giam Pietro Cipriani

    (Department of Economics, University of Verona)

  • Miltiadis Makris

    (Department of Economics, University of Exeter and CMPO, University of Bristol)

Abstract

This paper sets up an OLG economy with endogenous life expectancy to study how fiscal policy that redistributes between generations can open the door to sunspot equilibria. Agents invest independently in their own human capital, produce and consume output, and receive a pension upon retirement. The model produces an expectations coordination problem that can explain significant differences in growth paths followed by otherwise identical countries. In particular, we show that our economy may be characterised by local indeterminacy of dynamic equilibria, and hence feature fluctuations which are driven by extrinsic uncertainty.

Suggested Citation

  • Giam Pietro Cipriani & Miltiadis Makris, 2004. "Indeterminacy, intergenerational redistribution, endogenous longevity and human capital accumulation," Discussion Papers 0401, University of Exeter, Department of Economics.
    • Handle: RePEc:exe:wpaper:0401
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    Cited by:

    1. is not listed on IDEAS
    2. Giam Pietro Cipriani & Miltiadis Makris, 2012. "Payg Pensions And Human Capital Accumulation: Some Unpleasant Arithmetic," Manchester School, University of Manchester, vol. 80(4), pages 429-446, July.
    3. Francesco Orazi, 2015. "L?invecchiamento demografico delle Marche e le sue ripercussioni sullo sviluppo," PRISMA Economia - Societ? - Lavoro, FrancoAngeli Editore, vol. 2015(3), pages 136-150.

    More about this item

    Keywords

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    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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