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
Date Written: April 2004
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: Suggested Citation