Population ageing policy reforms and endogenous growth in Japan: a computable overlapping generations approach

Manabu Shimasawa

ESRI Discussion paper series from Economic and Social Research Institute (ESRI)

Abstract: We have developed a multi-period computable endogenous growth overlapping generations model generated by the accumulation of human capital. To study whether ageing itself and policy reform that aims to cope with aging make any quantitative impact through human capital formation on the Japanese economy, we simulate two policy change scenarios and compare the results of those with endogenous growth to those with exogenous growth. Three main results are obtained: (1) the human capital investment is important to assure sustained positive economic growth; (2) policy changes, pension reform, and fiscal consolidation promote human capital accumulation and thus boost economic growth; and (3) the traditional exogenous growth OLG model underestimates the effect of policy reform, comparing the endogenous growth of the OLG model. The robustness of these results is guaranteed from the sensitivity tests. JEL classification : C62; C63; C68; E27; E66; J11; J24; O41; O53;

Keywords: Overlapping generations; human capital; endogenous growth; population ageing (search for similar items in EconPapers)
Pages: 23 pages
Date: 2004-04
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