Population Ageing and Pension Reform in a Small Open Economy with Non-Traded Goods

Tinbergen Institute Discussion Paper No. TI 2005-021/2

42 Pages Posted: 29 Mar 2005

See all articles by Leon J.H. Bettendorf

Leon J.H. Bettendorf

Erasmus University Rotterdam (EUR)

Ben J. Heijdra

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 2004

Abstract

In this paper we study the implications of population ageing in an economy with a sizeable non-traded goods sector. To this effect a highly stylized micro-founded macro model is constructed in which the age structure of the population plays a non-trivial role. The model distinguishes separate birth and death probabilities (thus allowing for net population change), allows for age-dependent labour productivity (thus mimicing life-cycle saving), and includes a rudimentary pension system (thus allowing for intergenerational redistribution). The model is used to analytically study demographic and pension shocks.

Keywords: Fertility rate, overlapping generations, pension reform, demographic shocks, non-traded goods

JEL Classification: D91, E13, F41, H55

Suggested Citation

Bettendorf, Leon J.H. and Heijdra, Ben J., Population Ageing and Pension Reform in a Small Open Economy with Non-Traded Goods (April 2004). Tinbergen Institute Discussion Paper No. TI 2005-021/2, Available at SSRN: https://ssrn.com/abstract=678762 or http://dx.doi.org/10.2139/ssrn.678762

Leon J.H. Bettendorf (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 4081808 (Phone)

Ben J. Heijdra

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 7303 (Phone)
+31 50 363 7337 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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