Fiscal Policy Effects in a Heterogeneous-Agent OLG Economy with an Aging Population

Nishiyama, Shinichi (2015) Fiscal Policy Effects in a Heterogeneous-Agent OLG Economy with an Aging Population. Working Paper. Lancaster University, Department of Economics, Lancaster.

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Abstract

This paper incorporates the aging population projected by the U.S. Social Security Administration to a heterogeneous-agent OLG model with idiosyncratic wage shocks and analyzes its effects on individual households, the government budget, and the overall economy. The fiscal gap caused by the demographic change is 2.94% of GDP under the intermediate projection. The effect of the aging population is large by itself and depends significantly on how the government finances the cost of the demographic change. There is a strong trade-off between efficiency and equity, and this paper quantitatively assesses the pros and cons of stylized fiscal reform plans.

Item Type:
Monograph (Working Paper)
Subjects:
ID Code:
75301
Deposited By:
Deposited On:
18 Aug 2015 14:14
Refereed?:
No
Published?:
Published
Last Modified:
22 Oct 2020 00:08