An agent-based framework for the analysis of the macroeconomic effects of population aging

Siyan Chen () and Saul Desiderio
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Siyan Chen: Shantou University

Journal of Evolutionary Economics, 2023, vol. 33, issue 2, No 5, 393-427

Abstract: Abstract Over the last few decades world population has undergone an unprecedented process of aging, which has been having a significant impact on the macroeconomy. In this paper we propose a new agent-based macro model designed to study the macroeconomic consequences of aging. Using the model as a computational laboratory we test four hypotheses based on empirical evidence - namely that aging decreases real output and real interest rates, while increases trend inflation and income inequality. In general, performing several sensitivity analysis exercises and controlling for three different pension systems (pay-as-you-go and fully-funded), we find enough evidence supporting the hypotheses, especially in the fully-funded scenario. Moreover, we assess the ability of three policy responses to contrast the effects of aging: increasing the retirement age, reducing the amount of pensions and stimulating technological progress, finding that the last one is probably the best.

Keywords: Agent-based models; Population aging; Economic growth; Pension systems; Nonparametric regression; C14; C63; E00; H55; J11 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s00191-023-00814-w

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