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Population Ageing and Pension Reform in a Small Open Economy with Non-Traded Goods

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  • Leon Bettendorf

    (Department of Economics, Erasmus Universiteit Rotterdam)

  • Ben Heijdra

    (Department of Economics, University of Groningen)

Abstract

In this paper we study the implications of population ageing in an economy with a sizeable non-traded goods sector. To this effect a highly stylized micro-founded macro model is constructed in which the age structure of the population plays a non-trivial role. The model distinguishes separate birth and death probabilities (thus allowing for net population change), allows for age-dependent labour productivity (thus mimicing life-cycle saving), and includes a rudimentary pension system (thus allowing for intergenerational redistribution). The model is used to analytically study demographic and pension shocks.

Suggested Citation

  • Leon Bettendorf & Ben Heijdra, 2005. "Population Ageing and Pension Reform in a Small Open Economy with Non-Traded Goods," Tinbergen Institute Discussion Papers 05-021/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20050021
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    Cited by:

    1. Natalia Koval, 2020. "Budget System And Accounting In Budgetary Institutions," Three Seas Economic Journal, Publishing house "Baltija Publishing", vol. 1(1).
    2. Fisher, Walter H. & Heijdra, Ben J., 2009. "Keeping up with the ageing Joneses," Journal of Economic Dynamics and Control, Elsevier, vol. 33(1), pages 53-64, January.
    3. Nickel, Christiane & Rother, Philipp & Theophilopoulou, Angeliki, 2008. "Population ageing and public pension reforms in a small open economy," Working Paper Series 863, European Central Bank.
    4. Lidiia Fedoryshyna & Nataliia Vilchynska, 2021. "Influence Of Economic Space Imbalances On The Functioning Of The Enterprise Financial Mechanism," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 2(1).
    5. Yuliia Aleskerova & Olena Sàêîvsk & Yuliia Didenko, 2020. "Analysis Of The Essence Of Pension Insurance And Its Place In The System Of Social Protection Of The Populatio," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 6(2).
    6. Lidiia Fedoryshyna, 2020. "The Mechanism Of Fiscal Policy," Three Seas Economic Journal, Publishing house "Baltija Publishing", vol. 1(1).
    7. Walter H. Fisher & Ben J. Heijdra, 2008. "Growth and the Ageing Joneses," CESifo Working Paper Series 2466, CESifo.
    8. Yuliia Aleskerova, 2020. "Development Of Agricultural Insurance System," Green, Blue & Digital Economy Journal, Publishing house "Baltija Publishing", vol. 1(1).
    9. Gugushvili, Alexi, 2007. "Giving the ageing of the population how can countries afford pay-as-you-go social insurance pensions?," MPRA Paper 2869, University Library of Munich, Germany.
    10. Lidiia Fedoryshyna & Nataliia Vilchynska, 2021. "Influence Of Economic Space Imbalances On The Functioning Of The Enterprise Financial Mechanism," Green, Blue & Digital Economy Journal, Publishing house "Baltija Publishing", vol. 2(1).
    11. Gabay, Daniel & Grasselli, Martino, 2012. "Fair demographic risk sharing in defined contribution pension systems," Journal of Economic Dynamics and Control, Elsevier, vol. 36(4), pages 657-669.
    12. Lin, Hsing-Chun & Lee, Huey-Lin & Chen, Po-Chi & Hsu, Sheng-Ming & Lin, Kuo-Jung & Lee, Duu-Hwa & Chang, Ching-Cheng & Hsu, Shih-Shun, 2013. "The Potential Crisis of Population Ageing and Low Fertility: GEMTEE Dynamic Computable General Equilibrium used in Population Forecasts and Analysis," Conference papers 332413, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Davide Bazzana, 2020. "Ageing population and pension system sustainability: reforms and redistributive implications," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 971-992, October.
    14. Romain Restout, 2008. "Monopolistic Competition and the Dependent Economy Model," Working Papers hal-04140750, HAL.
    15. Romain Restout, 2009. "The Balassa-Samuelson model in general equilibrium with markup variations," Working Papers hal-04140849, HAL.
    16. Romain Restout, 2009. "The Balassa-Samuelson model in general equilibrium with markup variations," EconomiX Working Papers 2009-39, University of Paris Nanterre, EconomiX.

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    More about this item

    Keywords

    fertility rate; overlapping generations; pension reform; demographic shocks; non-traded goods;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • 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

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