Ageing, Government Budgets, Retirement, and Growth

Martin Gonzalez-Eiras and Dirk Niepelt

No 3352, CESifo Working Paper Series from CESifo

Abstract: We analyze the short and long run effects of demographic ageing—increased longevity and reduced fertility—on per-capita growth. The OLG model captures direct effects, working through adjustments in the savings rate, labor supply, and capital deepening, and indirect effects, working through changes of taxes, government spending components and the retirement age in politico-economic equilibrium. Growth is driven by capital accumulation and productivity increases fueled by public investment. The closed-form solutions of the model predict taxation and the retirement age in OECD economies to increase in response to demographic ageing and per-capita growth to accelerate. If the retirement age were held constant, the growth rate in politico-economic equilibrium would essentially remain unchanged, due to a surge of social security transfers and crowding out of public investment.

Keywords: ageing; government budgets; retirement; growth (search for similar items in EconPapers)
JEL-codes: E62 H50 J26 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp3352.pdf (application/pdf)

Related works:
Journal Article: Ageing, government budgets, retirement, and growth (2012)
Working Paper: Ageing, government budgets, retirement, and growth (2012)
Working Paper: Ageing, Government Budgets, Retirement, and Growth (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3352

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().