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Population Aging and its Macroeconomic Implications; A Framework for Analysis

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  • Hamid Faruqee

Abstract

This paper develops a model to examine the macroeconomic implications of population aging. Using a general equilibrium framework, the analysis examines the various channels through which changes in demographics affect the economy. Age-earnings profiles are taken to summarize differences in effective labor supply across age groups and to help determine changes in consumption and saving behavior that occur over an agent's lifetime. Aggregating these supply- and demand-side effects, the implications of aging on economic activity and fiscal policy are then examined.

Suggested Citation

  • Hamid Faruqee, 2002. "Population Aging and its Macroeconomic Implications; A Framework for Analysis," IMF Working Papers 02/16, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:02/16
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    References listed on IDEAS

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    1. David N. Weil, 1994. "The Saving of the Elderly in Micro and Macro Data," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 55-81.
    2. Faruqee, Hamid & Muhleisen, Martin, 2003. "Population aging in Japan: demographic shock and fiscal sustainability," Japan and the World Economy, Elsevier, vol. 15(2), pages 185-210, April.
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    8. Hamid Faruqee & Douglas Laxton & Steven Symansky, 1997. "Government Debt, Life-Cycle Income, and Liquidity Constraints: Beyond Approximate Ricardian Equivalence," IMF Staff Papers, Palgrave Macmillan, vol. 44(3), pages 374-382, September.
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    18. Hamid Faruqee, 2003. "Debt, Deficits, and Age-specific Mortality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(2), pages 300-312, April.
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    Citations

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    Cited by:

    1. Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2015. "Optimal choice of health and retirement in a life-cycle model," Journal of Economic Theory, Elsevier, vol. 158(PA), pages 186-212.
    2. Mao, Rui & Xu, Jianwei, 2014. "Population aging, consumption budget allocation and sectoral growth," China Economic Review, Elsevier, vol. 30(C), pages 44-65.
    3. Hamid Faruqee & Natalia T. Tamirisa, 2006. "Macroeconomic Effects and Policy Challenges of Population Aging," IMF Working Papers 06/95, International Monetary Fund.
    4. Hamid Faruqee, 2003. "Debt, Deficits, and Age-specific Mortality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(2), pages 300-312, April.
    5. Seitz, Helmut & Freigang, Dirk & Kempkes, Gerhard, 2005. "Demographic Change and Federal Systems: Some Preliminary Results for Germany," Dresden Discussion Paper Series in Economics 07/05, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    6. repec:eee:eecrev:v:100:y:2017:i:c:p:428-462 is not listed on IDEAS
    7. Jung, Juergen & Tran, Chung & Chambers, Matthew, 2017. "Aging and health financing in the U.S.: A general equilibrium analysis," European Economic Review, Elsevier, vol. 100(C), pages 428-462.
    8. Jong-Won Yoon & Jinill Kim & Jungjin Lee, 2014. "Impact of Demographic Changes on Inflation and the Macroeconomy," IMF Working Papers 14/210, International Monetary Fund.
    9. Dora M Iakova, 2007. "The Macroeconomic Effects of Migration from the New European Union Member States to the United Kingdom," IMF Working Papers 07/61, International Monetary Fund.
    10. Faruqee, Hamid & Muhleisen, Martin, 2003. "Population aging in Japan: demographic shock and fiscal sustainability," Japan and the World Economy, Elsevier, vol. 15(2), pages 185-210, April.
    11. Narciso, Alexandre, 2010. "The impact of population ageing on international capital flows," MPRA Paper 26457, University Library of Munich, Germany.
    12. Lamin Y Leigh, 2006. "Hong Kong Special Administrative Region; Macroeconomic Impact of an Aging Population in a Highly Open Economy," IMF Working Papers 06/87, International Monetary Fund.
    13. Mukesh Chawla & Gordon Betcherman & Arup Banerji, 2007. "From Red to Gray : The "Third Transition" of Aging Populations in Eastern Europe and the Former Soviet Union," World Bank Publications, The World Bank, number 6741.

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