Worldwide Population Aging: Endogenous Policy Formation and Capital Market Transmissions in the Presence of Symmetric Demographic Shocks
This paper examines the transition effects of population aging in more developed regions that is also expected to occur in developing regions in the near future. We address these effects by exploring the influences of internationally mobile capital and a politically responsive fiscal policy in a two-country overlapping generations model. Our results show that the combination of capital mobility and endogenous fiscal policy play an important role in how economies respond to population aging. Capital mobility has consumption smoothing effects but endogenous fiscal policy is the key factor in creating asymmetries between countries. The interaction of the two may even account for a change in the pattern, in addition to a change in the size, of the effects of population aging on economic growth and welfare when compared to closed economy and exogenous fiscal policy models. We find that even when the demographic shock in the two regions is symmetric, reaction to this shock depends on the timing of the shock. Overall, the late, developing country demographic shock produces relatively more favorable economic outcomes worldwide. Finally, our analysis of the timing of developing country aging indicates that an early aging scenario is more beneficial for both regions.
|Date of creation:||Jun 2000|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (315) 443-3114
Fax: (315) 443-1081
Web page: http://www.maxwell.syr.edu/cpr.aspx
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Holtz-Eakin, Douglas, 1993. "Demographics, Political Power and Economic Growth," Public Finance = Finances publiques, , vol. 48(Supplemen), pages 349-65.
- Matthew E. Kahn, 2002. "Demographic change and the demand for environmental regulation," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(1), pages 45-62.
- Paul R. Masson & Ralph W. Tryon, 1990.
"Macroeconomic Effects of Projected Population Aging in Industrial Countries,"
IMF Staff Papers,
Palgrave Macmillan, vol. 37(3), pages 453-485, September.
- Paul R. Masson & Ralph W. Tryon, 1990. "Macroeconomic Effects of Prelected Population Aging in Industrial Countries," IMF Working Papers 90/5, International Monetary Fund.
- Meijdam, A.C. & Verbon, H.A.A., 1996.
"Aging and political decision making on public pensions,"
Other publications TiSEM
30434a77-0d7a-4d11-8fbd-3, Tilburg University, School of Economics and Management.
- Meijdam, Lex & Verbon, Harrie A A, 1996. "Aging and Political Decision Making on Public Pensions," Journal of Population Economics, Springer, vol. 9(2), pages 141-58, May.
- Lex Meijdam & Harrie Verbon, 1996. "Aging and political decision making on public pensions," Journal of Population Economics, Springer, vol. 9(2), pages 141-158, June.
- David M. Cutler & James M. Poterba & Louise M. Sheiner & Lawrence H. Summers, 1990.
"An Aging Society: Opportunity or Challenge?,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 21(1), pages 1-74.
- Dave Turner & Claude Giorno & Alain de Serres & Ann Vourc'h & Pete Richardson, 1998. "The Macroeconomic Implications of Ageing in a Global Context," OECD Economics Department Working Papers 193, OECD Publishing.
- Douglas Holtz-Eakin & Mary E. Lovely & Mehmet S. Tosun, 2000.
"Generational Conflict, Human Capital Accumulation, and Economic Growth,"
NBER Working Papers
7762, National Bureau of Economic Research, Inc.
- Douglas Holtz-Eakin & Mary E. Lovely & Mehmet Serkan Tosun, 2000. "Generational Conflict, Human Capital Accumulation, and Economic Growth," Center for Policy Research Working Papers 28, Center for Policy Research, Maxwell School, Syracuse University.
- James M. Poterba, 1997.
"Demographic structure and the political economy of public education,"
Journal of Policy Analysis and Management,
John Wiley & Sons, Ltd., vol. 16(1), pages 48-66.
- James M. Poterba, 1996. "Demographic Structure and the Political Economy of Public Education," NBER Working Papers 5677, National Bureau of Economic Research, Inc.
- Buiter, Willem H, 1981.
"Time Preference and International Lending and Borrowing in an Overlapping-Generations Model,"
Journal of Political Economy,
University of Chicago Press, vol. 89(4), pages 769-97, August.
- Willem H. Buiter, 1979. "Time Preference and International Lending and Borrowing in an Overlapping-Generations Model," NBER Working Papers 0352, National Bureau of Economic Research, Inc.
- repec:fth:harver:1490 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:max:cprwps:27. 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: (Kelly Bogart)or (Katrina Wingle)
If references are entirely missing, you can add them using this form.