Interest rates and endogenous population growth: joint age-dependent dynamics

Paulo Brito ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents a uncertain-lifetime overlapping-generations continuous time model for an Arrow-Debreu economy with endogenous fertility, in which age-dependent variables are explicitly introduced. The general equilibrium paths for the discount factor and newborns are derived from a system of two coupled forward-backward integral equations. The forward mechanism is related to aggregation between cohorts and the backward mechanism to life-cycle decisions. We study changes in the age-dependent profiles of age-dependent distributions for productivity and time use. We show that high maximum ages of productivity and child-rearing fitness increase the long run interest and growth rates, and low maximum ages can lead to asset pricing bubbles and negative population growth rates.

Keywords: OLG; endogenous fertility; Arrow-Debreu; integral equations (search for similar items in EconPapers)
JEL-codes: C6 E2 J1 (search for similar items in EconPapers)
Date: 2014-03-27
New Economics Papers: this item is included in nep-age, nep-dge, nep-gro and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:58656

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