Should America Save for Its Old Age? Fiscal Policy, Population Aging, and National Saving

Douglas Elmendorf and Louise M. Sheiner

Journal of Economic Perspectives, 2000, vol. 14, issue 3, 57-74

Abstract: We examine whether the aging of the U.S. population adds force to traditional arguments for boosting national saving and conclude--perhaps surprisingly--that it may not. Aging boosts the demands on future resources, but it also changes the rate of return the U.S. economy can expect from saving. We find that the net effect on desired saving is small: some specifications imply that present consumption should fall by a fraction of 1 percent; others imply that consumption should actually increase. Thus, it is optimal to allow future cohorts to bear much/all of the burden of population aging.

JEL-codes: E21 E62 H55 (search for similar items in EconPapers)
Date: 2000
Note: DOI: 10.1257/jep.14.3.57
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Citations: View citations in EconPapers (57)

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