The baby boom and economic growth
This paper presents a model of economic growth based on the life-cycle hypothesis to determine the path of capital accumulation and economic growth as the baby boom passes through the U.S. economy. The model predicts that a baby boom causes a temporary decline of the capital-labor ratio. The temporary drop of the capital-labor ratio requires a decrease in consumption per capita but as the baby boom generation nears retirement, capital intensity increases, which raises output per worker and per capita consumption. Furthermore, and perhaps counter intuitively, the model predicts that the saving rate of the economy falls during the period of increasing consumer welfare. These results suggest that consumer welfare may increase as the baby boom generation begins to retire near the turn of the century. Thus the retirement of the baby boom generation need not necessarily be a cause of concern.
|Date of creation:||1994|
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- Ray C. Fair & Kathryn M. Dominguez, 1987.
"Effects of the Changing U.S. Age Distribution on Macroeconomic Equations,"
Cowles Foundation Discussion Papers
839, Cowles Foundation for Research in Economics, Yale University.
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- N. Gregory Mankiw & David N. Weil, 1988.
"The Baby Boom, The Baby Bust, and the Housing Market,"
NBER Working Papers
2794, National Bureau of Economic Research, Inc.
- Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
- Clark, Robert L & Kreps, Juanita & Spengler, Joseph J, 1978. "Economics of Aging: A Survey," Journal of Economic Literature, American Economic Association, vol. 16(3), pages 919-62, September.
- Cutler, D.M. & Poterba, J.M. & Sheiner, L.M. & Summers, L.H., 1990.
"An Aging Society: Opportunity Or Challenge,"
553, Massachusetts Institute of Technology (MIT), Department of Economics.
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