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Aging and the Macroeconomy

Juan Carlos Conesa (), Akshar Saxena (), Daniela Costa (), Gajendran Raveendranathan, Parisa Kamali and Timothy Kehoe ()
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Parisa Kamali: University of Minnesota

No 930, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: This paper develops an overlapping generations model to study the macroeconomic implications of an aging population. We calibrate the model along a transition path from 1950 to 2100 that features rising survival probabilities, an increasing share of college graduates, and rising healthcare costs. The aging of the population leads to increased government spending on Medicare, Medicaid, and Social Security benefits. We find that the increase in the share of college graduates compensates for most of the increase in government spending. Consequently, taxes will only have to rise by a few percentage points to balance the budget in the future even if the current eligibility criteria and benefit levels for social insurance programs are preserved.

Date: 2018
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge, nep-ias and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:930

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More papers in 2018 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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