Public Saving and Policy Coordination in Ageing Economies

Martin Floden ()

No 3567, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In the coming decades, the share of people in working age will fall significantly in most developed countries. According to optimal taxation theory, public debts should be reduced before the baby-boom generation retires. I find that if debts are instead maintained at the current levels, welfare may be reduced substantially in countries with a large public sector and/or a large demographic change. Furthermore, since the population ageing will be less dramatic in the United States than in Europe, capital will move from Europe to the United States. These capital movements will facilitate the US demographic transition but aggravate the transition in most European countries.

Keywords: demographics; international capital flows; optimal taxation; public debt (search for similar items in EconPapers)
JEL-codes: E62 F21 H21 H60 J18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-ifn and nep-mac
Date: 2002-10
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Journal Article: Public Saving and Policy Coordination in Aging Economies (2003)
Software Item: Matlab code for Public saving and policy coordination in aging economies
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