Possible Paths for GDP Per Capita – Simulation with a Demographic Growth Model

Éva Berde () and Izabella Kuncz ()
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Éva Berde: Corvinus University of Budapest
Izabella Kuncz: Corvinus University of Budapest

Financial and Economic Review, 2017, vol. 16, issue 4, 36-57

Abstract: To begin our paper, we point out the importance of demographic growth models by highlighting the conceptual framework of overlapping generations. We define the formulas in our own model based on Lee – Mason (2010), modifying the original framework in several respects. We present the exogenous fertility and survival rates in different demographic scenarios, and then we derive the simulation paths for GDP per capita from these. A word of caution regarding our results: the simple structure of our model disregards several factors potentially influencing growth. When concentrating solely on the impact of changes in fertility and mortality rates, our simulation results suggest that a drop in the total fertility rate, even to slightly below the replacement level, and even in the context of a relatively high survival rate, may increase GDP per capita. However, in the case of an extremely low total fertility rate and a high survival rate, an economic downturn can be expected.

Keywords: overlapping generations model; total fertility rate; survival rate; simulation path; GDP per capita (search for similar items in EconPapers)
JEL-codes: E23 J11 O40 (search for similar items in EconPapers)
Date: 2017
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