IDEAS home Printed from https://ideas.repec.org/p/fip/fedmsr/534.html
   My bibliography  Save this paper

An Aggregate Model for Policy Analysis with Demographic Change

Author

Listed:
  • McGrattan, Ellen R.

    (Federal Reserve Bank of Minneapolis)

  • Prescott, Edward C.

    (Federal Reserve Bank of Minneapolis)

Abstract

Many countries are facing challenging fiscal financing issues as their populations age and the number of workers per retiree falls. Policymakers need transparent and robust analyses of alternative policies to deal with demographic changes. In this paper, we propose a simple framework that can easily be matched to aggregate data from the national accounts. We demonstrate the usefulness of our framework by comparing quantitative results for our aggregate model with those of a related model that includes within-age-cohort heterogeneity through productivity differences. When we assess proposals to switch from the current tax and transfer system in the United States to a mandatory saving-for-retirement system with no payroll taxation, we find that the aggregate predictions for the two models are close.

Suggested Citation

  • McGrattan, Ellen R. & Prescott, Edward C., 2016. "An Aggregate Model for Policy Analysis with Demographic Change," Staff Report 534, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmsr:534
    as

    Download full text from publisher

    File URL: https://www.minneapolisfed.org/research/sr/sr534.pdf
    File Function: Full text
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Congressional Budgete Office, 2012. "Effective Marginal Tax Rates for Low- and Moderate-Income Workers," Reports 43709, Congressional Budget Office.
    2. Ellen R. McGrattan & Edward C. Prescott, 2017. "On financing retirement with an aging population," Quantitative Economics, Econometric Society, vol. 8(1), pages 75-115, March.
    3. Congressional Budgete Office, 2012. "Effective Marginal Tax Rates for Low- and Moderate-Income Workers," Reports 43709, Congressional Budget Office.
    4. Congressional Budgete Office, 2012. "Effective Marginal Tax Rates for Low- and Moderate-Income Workers," Reports 43709, Congressional Budget Office.
    5. Robert J. Barro & Charles J. Redlick, 2011. "Macroeconomic Effects From Government Purchases and Taxes," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 51-102.
    6. Congressional Budgete Office, 2012. "Effective Marginal Tax Rates for Low- and Moderate-Income Workers," Reports 43709, Congressional Budget Office.
    7. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
    8. Congressional Budgete Office, 2012. "Effective Marginal Tax Rates for Low- and Moderate-Income Workers," Reports 43709, Congressional Budget Office.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Taxation; Retirement; Social Security; Medicare;

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedmsr:534. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jannelle Ruswick). General contact details of provider: http://edirc.repec.org/data/frbmnus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.