OPTIMAL INVESTMENT, EDUCATION, AND CONSUMPTION UNDER DEMOGRAPHIC CHANGES FOR A SMALL-OPEN ECONOMY

Hoan Xuan Pham ()
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Hoan Xuan Pham: Insurance Commission, Ministry of Finance, Vietnam, 24 Tran Hung Dao, Hanoi, Vietnam

The Singapore Economic Review (SER), 2009, vol. 54, issue 01, 41-59

Abstract: It is shown, using a vintage model of education which is developed in this paper, that given the assumptions of the model, the optimal path of investment in education is to keep the level of investment per student constant and the optimal path of investment in physical capital is to keep the capital-labor ratio constant over time. The pressure to reduce current consumption caused by population ageing is partly mitigated by the fact that a younger population, in the current time, is relatively more efficient in producing utility than an older one, in the future.

Keywords: Optimal investment; physical capital; human capital; fertility; life expectancy (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1142/S021759080900315X

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