HOW SHOULD THE ALLOCATION OF RESOURCES ADJUST TO THE BABY BUST?
Alexandra Rillaers (),
David de la Croix () and
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Alexandra Rillaers: Universidad de Alicante
Geraldine Mahieu: National Bank of Belgium
Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)
We analyze the impact of a drop in fertility on the optimal allocation of resources in an overlapping generations economy where old workers care about leisure. We also characterize optimal dynamics and study the decentralization of the optimum by means of inter-generational transfers and/or public debt. We conclude that the policy recommendations of postponing retirement is fragile and depend on preferences and technologies. Also, even when the optimal adjustment of public debt goes into the expected direction in the long run, -i.e. public debt should decrease,- this may not be the case during the transition.
Keywords: Demographic shock; retirement age; public debt (search for similar items in EconPapers)
JEL-codes: E62 H55 O41 (search for similar items in EconPapers)
Pages: 38 pages
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Published by Ivie
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http://www.ivie.es/downloads/docs/wpasad/wpasad-2003-27.pdf Fisrt version / Primera version, 2003 (application/pdf)
Journal Article: How Should the Allocation of Resources Adjust to the Baby Bust? (2004)
Working Paper: How should the allocation of resources adjust to the baby bust? (2004)
Working Paper: How should retirement policy adjust to the baby bust ? (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2003-27
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