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Aging in Europe: Reforms, international diversification and behavioral reactions

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Listed:
  • Börsch-Supan, Axel
  • Härtl, Klaus
  • Ludwig, Alexander

    (Munich Center for the Economics of Aging (MEA))

Abstract

The extent of demographic changes in Europe and Asia is much more drastic than in the US. This paper studies the effects of population aging on the interactions between economic growth and living standards in Europe with labor market and pension reform, behavioral adaptations, and international capital flows. Our analysis is based on an overlapping generations model with behavioral reactions to reform which is extended to the multi-country situation typical for Europe. While the negative effects of population aging on growth in Europe can in principle be compensated by reforms and economic adaptation mechanisms, they may be partially offset by behavioral reactions.

Suggested Citation

  • Börsch-Supan, Axel & Härtl, Klaus & Ludwig, Alexander, 2014. "Aging in Europe: Reforms, international diversification and behavioral reactions," MEA discussion paper series 201425, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    • Handle: RePEc:mea:meawpa:201425
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    References listed on IDEAS

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    1. Axel BÖRSCH‐SUPAN & Alexander LUDWIG, 2009. "Aging, Asset Markets, and Asset Returns: A View From Europe to Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 4(1), pages 69-92, June.
    2. Laurence Ball & N. Gregory Mankiw, 2002. "The NAIRU in Theory and Practice," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 115-136, Fall.
    3. Ravi Bansal & Amir Yaron, 2004. "Risks for the Long Run: A Potential Resolution of Asset Pricing Puzzles," Journal of Finance, American Finance Association, vol. 59(4), pages 1481-1509, August.
    4. Ludwig, Alexander, 2007. "The Gauss-Seidel-quasi-Newton method: A hybrid algorithm for solving dynamic economic models," Journal of Economic Dynamics and Control, Elsevier, vol. 31(5), pages 1610-1632, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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