ECONOMIC IMPLICATIONS OF AN AGING POPULATION: THE CASE OF FIVE ASIAN ECONOMIES

Manabu Shimasawa and Hidetoshi Hosoyama

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

Abstract: This paper constructs a stylized general equilibrium overlapping generations model in which child-rearing costs are modeled explicitly to evaluate quantitatively the effects of a demographic transition in five Asian economies: Japan, China, Korea, Taiwan, and Singapore. The model looks at two key points: (i) how both aggregate variables and inter-generational welfare are affected, and (ii) the extent to which the policy reform reduces the negative effects it gives rise to. With this in mind, we simulate for two scenarios: a benchmark scenario and a policy change scenario. The simulation results indicate that population aging could have a major impact on savings rate, factor prices, and economic welfare. Especially important is the conclusion that population aging will lead to the end of Asia's high economic growth rates. But our simulation results also indicate that policy reform could reduce the negative effects. JEL classification: C68; E27; H55; J11

Keywords: aging; policy reform; overlapping generations; Asian economy (search for similar items in EconPapers)
Pages: 31 pages
Date: 2004-09
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Citations: View citations in EconPapers (1)

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