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The Economic Dynamics of an Ageing Population: The Case of Four OECD Countries

Listed author(s):
  • Alan J. Auerbach
  • Laurence J. Kotlikoff
  • Robert P. Hagemann
  • Giuseppe Nicoletti

Demographic changes, such as those anticipated in most OECD countries, have many economic effects that impinge on a country's fiscal viability. Evaluation of the effects of associated changes in capital-labour ratios and the welfare and behaviour of different generations requires the use of a dynamic general equilibrium model. This paper uses an overlapping generations demographic simulation model, which incorporates bequest behaviour, technological change, the possibility that the economy is open to international trade, and government consumption expenditures that depend on the age composition of the population. The model has been further adapted to study the effects of anticipated demographic changes in Japan, the Federal Republic of Germany, Sweden and the United States. The simulation results indicate that these changes could have a major impact on rates of national saving, real wage rate and current accounts. One of this paper's fundamental lessons is that allowing for general ... Des variations démographiques comme celles anticipées dans la plupart des pays de la zone de l'OCDE ont de multiples effets économiques qui influent sur la viabilité de la politique budgétaire d'un pays. En évaluer les conséquences sur le rapport capital-travail, le bien-être, et le comportement des différentes générations exige l'utilisation d'un modèle dynamique d'équilibre général. Dans cette étude on utilise un modèle de simulation démographique de générations chevauchées incorporant les legs, le progrès technologique, l'ouverture de l'économie à l'échange international, et les dépenses publiques liées à la structure par âge de la population. Le modèle a été également modifié afin d'étudier les effets de la transition démographique au Japon, en République Fédérale d'Allemagne, en Suède, et aux Etats-Unis. Les résultats des simulations indiquent qu'elle pourrait avoir un impact profond sur les taux d'épargne nationaux, les salaires réels et les balances courantes. Une des leçons ...

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 62.

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Date of creation: 01 Jan 1989
Handle: RePEc:oec:ecoaaa:62-en
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