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Debt, Deficits, and Age-Specific Mortality

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  • Hamid Faruqee

Abstract

This paper develops an overlapping agents model with age-specific mortality rates. The analytical framework also nests Blanchard's (1985) "perpetual youth" model as a special, though perhaps not realistic, case. With age specific mortality rates, youth is "fleeting." Using standard hyperbolic functions, the model with fleeting youth is able to closely replicate the empirical relation between age and mortality. The comparative implications for deficit finance are also examined and age-specific mortality is shown to alter the non-Ricardian properties of the model.

Suggested Citation

  • Hamid Faruqee, 2002. "Debt, Deficits, and Age-Specific Mortality," IMF Working Papers 02/19, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:02/19
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    References listed on IDEAS

    as
    1. Hamid Faruqee, 2002. "Population Aging and its Macroeconomic Implications; A Framework for Analysis," IMF Working Papers 02/16, International Monetary Fund.
    2. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    3. Davies, James B, 1981. "Uncertain Lifetime, Consumption, and Dissaving in Retirement," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 561-577, June.
    4. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
    5. 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.
    6. Buiter, Willem H, 1988. "Death, Birth, Productivity Growth and Debt Neutrality," Economic Journal, Royal Economic Society, vol. 98(391), pages 279-293, June.
    7. Hamid Faruqee & Douglas Laxton, 2000. "Life-Cycles, Dynasties, Savings; Implications for Closed and Small, Open Economies," IMF Working Papers 00/126, International Monetary Fund.
    8. Abel, Andrew B, 1985. "Precautionary Saving and Accidental Bequests," American Economic Review, American Economic Association, vol. 75(4), pages 777-791, September.
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    Citations

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    Cited by:

    1. Ben J. Heijdra & Ward E. Romp, 2008. "A life-cycle overlapping-generations model of the small open economy," Oxford Economic Papers, Oxford University Press, vol. 60(1), pages 88-121, January.
    2. Growiec, Jakub, 2010. "Human Capital, Aggregation, And Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 14(02), pages 189-211, April.
    3. repec:dgr:rugsom:05c04 is not listed on IDEAS
    4. Harding, Don & Pagan, Adrian, 2006. "Synchronization of cycles," Journal of Econometrics, Elsevier, pages 59-79.
    5. Rosa Aísa & Fernando Pueyo, 2004. "Endogenous longevity, health and economic growth: a slow growth for a longer life?," Economics Bulletin, AccessEcon, vol. 9(3), pages 1-10.
    6. Bruce, Neil & Turnovsky, Stephen J., 2013. "Social security, growth, and welfare in overlapping generations economies with or without annuities," Journal of Public Economics, Elsevier, vol. 101(C), pages 12-24.
    7. D'ALBIS Hippolyte & AUGERAUD-VÉRON Emmanuelle, 2009. "Continuous-Time Overlapping Generations Models," LERNA Working Papers 09.15.291, LERNA, University of Toulouse.
    8. Jochen Mierau & Stephen Turnovsky, 2014. "Capital accumulation and the sources of demographic change," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(3), pages 857-894, July.
    9. Warwick J. McKibbin & Jeremy Nguyen, 2004. "Modelling Global Demographic Change:Results For Japan," CAMA Working Papers 2004-04, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    10. Warwick J. McKibbin, 2006. "The Global Macroeconomic Consequences of a Demographic Transition," Asian Economic Papers, MIT Press, vol. 5(1), pages 92-134, Winter.
    11. Théophile T. Azomahou & Raouf Boucekkine & Bity Diene, 2009. "A closer look at the relationship between life expectancy and economic growth," International Journal of Economic Theory, The International Society for Economic Theory, pages 201-244.
    12. Luciano Fanti & Mimmo Iannelli & Piero Manfredi, 2013. "Neoclassical growth with endogenous age distribution. Poverty vs low-fertility traps as steady states of demographic transitions," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1457-1484, October.
    13. Heijdra, Ben J. & Romp, Ward E., 2009. "Human capital formation and macroeconomic performance in an ageing small open economy," Journal of Economic Dynamics and Control, Elsevier, vol. 33(3), pages 725-744, March.
    14. Warwick J. McKibbin, 2005. "Global Demographic Change And Japanese Macroeconomic Performance," CAMA Working Papers 2005-13, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    15. Atolia, Manoj & Papageorgiou, Chris & Turnovsky, Stephen, 2017. "Private and Public Health Investment Decisions," MPRA Paper 79842, University Library of Munich, Germany.
    16. McKibbin, Warwick J. & Wilcoxen, Peter J., 2013. "A Global Approach to Energy and the Environment," Handbook of Computable General Equilibrium Modeling, Elsevier.
    17. Raouf Boucekkine & Bity Diene & Theophile Azomahou, 2008. "Growth Economics of Epidemics: A Review of the Theory," Mathematical Population Studies, Taylor & Francis Journals, vol. 15(1), pages 1-26.
    18. Hamid Faruqee, 2002. "Population Aging and its Macroeconomic Implications; A Framework for Analysis," IMF Working Papers 02/16, International Monetary Fund.
    19. repec:ebl:ecbull:v:9:y:2004:i:3:p:1-10 is not listed on IDEAS
    20. C. Kerdrain & V. Lapègue, 2011. "Restrictive Fiscal Policies in Europe: What are the Likely Effects?," Documents de Travail de la DESE - Working Papers of the DESE g2011-17, Institut National de la Statistique et des Etudes Economiques, DESE.

    More about this item

    Keywords

    Debt; Fiscal policy; Government debt; Ricardian Equivalence; Saving; mortality rates; mortality rate; birth; birth rate; death rate; Macroeconomics: Consumption; Production; Employment; and Investment: Forecasting and Simulation; Fiscal Policies and Behavior of Economic Agents: Household;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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