Fiscal Policy Effects in a Heterogeneous-Agent OLG Economy with an Aging Population

Shinichi Nishiyama (nishiyama@econ.kyoto-u.ac.jp)

No 89793613, Working Papers from Lancaster University Management School, Economics Department

Abstract: This paper incorporates the aging population projected by the U.S. Social Security Administration to a heterogeneous-agent OLG model with idiosyncratic wage shocks and analyzes its effects on individual households, the government budget, and the overall economy. The fiscal gap caused by the demographic change is 2.94% of GDP under the intermediate projection. The effect of the aging population is large by itself and depends significantly on how the government finances the cost of the demographic change. There is a strong trade-off between efficiency and equity, and this paper quantitatively assesses the pros and cons of stylized fiscal reform plans.

Keywords: dynamic general equilibrium; heterogeneous agents; overlapping generations; aging population; fiscal policy (search for similar items in EconPapers)
JEL-codes: D91 E62 H31 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-age, nep-dge, nep-ger and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Journal Article: Fiscal policy effects in a heterogeneous-agent OLG economy with an aging population (2015)
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