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Aging, Informality and Public Policies in a Small Open Economy

Author

Listed:
  • Daniel Baksa

    () (Department of Economics, Central European University; Institute of Economics, Hungarian Academy of Sciences)

  • Mihnea Constantinescu

    () (Bank of Lithuania)

  • Zsuzsa Munkacsi

    () (Bank of Lithuania)

Abstract

We extend OGRE, the overlapping generation model developed by Baksa and Munkacsi (2016) by adding openness. We then employ the model to explore how the macroeconomic effects of aging, assumed to manifest itself as a decrease in the mortality rate, can be counteracted through public policies. The extended version inherits the previous modelling features of OGRE allowing us to also account for the impact openness has on the effectiveness of the considered policies.

Suggested Citation

  • Daniel Baksa & Mihnea Constantinescu & Zsuzsa Munkacsi, 2016. "Aging, Informality and Public Policies in a Small Open Economy," Bank of Lithuania Discussion Paper Series 2, Bank of Lithuania.
  • Handle: RePEc:lie:dpaper:2
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    References listed on IDEAS

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    2. Castro, Gabriela & Maria, José R. & Félix, Ricardo Mourinho & Braz, Cláudia Rodrigues, 2017. "Aging And Fiscal Sustainability In A Small Euro Area Economy," Macroeconomic Dynamics, Cambridge University Press, vol. 21(7), pages 1673-1705, October.
    3. Christian Jaag & Christian Keuschnigg & Mirela Keuschnigg, 2007. "Pension Reform, Retirement and Life-Cycle Unemployment," CESifo Working Paper Series 2163, CESifo.
    4. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
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    11. Kilponen, Juha & Kinnunen, Helvi & Ripatti, Antti, 2006. "Population ageing in a small open economy : some policy experiments with a tractable general equilibrium model," Research Discussion Papers 28/2006, Bank of Finland.
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    Cited by:

    1. Masuch, Klaus & Anderton, Robert & Setzer, Ralph & Benalal, Nicholai, 2018. "Structural policies in the euro area," Occasional Paper Series 210, European Central Bank.
    2. Daniel Baksa & Zsuzsa Munkacsi & Carolin Nerlich, 2020. "A Framework for Assessing the Costs of Pension Reform Reversals," IMF Working Papers 2020/132, International Monetary Fund.

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    More about this item

    Keywords

    population aging; public pension reforms; pay-as-you-go; fully funded; shadow economy; informal employment; small open-economy; overlapping generations;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market

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