Hostname: page-component-848d4c4894-5nwft Total loading time: 0 Render date: 2024-04-30T10:33:29.303Z Has data issue: false hasContentIssue false
  • English
  • Français

DEMOGRAPHY AND GROWTH: A UNIFIED TREATMENT OF OVERLAPPING GENERATIONS

Published online by Cambridge University Press:  28 September 2012

Neil Bruce  and
Stephen J. Turnovsky
Neil Bruce*
Affiliation:
University of Washington
Stephen J. Turnovsky
Affiliation:
University of Washington
*
Address correspondence to: Neil Bruce, Department of Economics, Campus Box 353330, University of Washington, Seattle, WA 98195–3330, USA; e-mail: brucen@u.washington.edu.
Get access Rights & Permissions [Opens in a new window]

Abstract

We construct a unified overlapping-generations framework of equilibrium growth that includes the Blanchard “perpetual youth” model, the Samuelson model, and the infinitely lived–agent model as limit specifications for a “realistic” two-parameter survivorship function. We assess how the limit specifications compare with the general survival function, and analyze how exogenous changes in demographic conditions affect equilibrium growth and savings rates. Predicted effects are consistent with some cross-country correlations between demographic conditions and growth rates.

Keywords

DemographyGrowthOverlapping Generations
Type
Articles
Information
Macroeconomic Dynamics , Volume 17 , Issue 8 , December 2013 , pp. 1605 - 1637
Copyright
Copyright © Cambridge University Press 2012 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Acemoglu, D. (2009) Introduction to Modern Economic Growth. Princeton, NJ: Princeton University Press.Google Scholar
An, C-B. and Jeon, S-H. (2006) Demographic change and economic growth: An inverted-U shape relationship. Economics Letters 92, 447–454.CrossRefGoogle Scholar
Auerbach, A. J. and Kotlikoff, L. J. (1987) The Dynamics of Fiscal Policy. Cambridge, UK: Cambridge University Press.Google Scholar
Barro, R. J. and Becker, G. S. (1989) Fertility choice in a model of economic growth. Econometrica 57, 481–501.CrossRefGoogle Scholar
Blanchard, O. J. (1985) Debt, deficits and finite horizons. Journal of Political Economy 93, 223–247.CrossRefGoogle Scholar
Blanchard, O. J. and Fischer, S. (1989) Lectures on Macroeconomics. Cambridge, MA: MIT Press.Google Scholar
Bommier, A. and Lee, R. D. (2003) Overlapping generations models with realistic demography. Journal of Population Economics 16, 135–160.Google Scholar
Bond, E. W., Wang, P., and Yip, C. K. (1996) A general two-sector model of endogenous growth with human and physical capital: Balanced growth and transitional dynamics. Journal of Economic Theory 68, 149–173CrossRefGoogle Scholar
Bongaarts, J. (2009) Human population growth and the demographic transition. Philosophical Transactions of the Royal Society 364, 2985–2990.CrossRefGoogle ScholarPubMed
Boucekkine, R., de la Croix, D., and Licandro, O. (2002) Vintage human capital, demographic trends, and endogenous growth. Journal of Economic Theory 104, 340–375.CrossRefGoogle Scholar
Burke, J. L. (1996) Equilibrium for overlapping generations in continuous time. Journal of Economic Theory 70, 346–390.Google Scholar
Cass, D. and Yaari, M. E. (1967) Individual savings, aggregate capital accumulation, and efficient growth. In Shell, K. (ed.). Essays on the Theory of Optimal Economic Growth, pp. 233–268. Cambridge, MA: MIT Press.Google Scholar
d'Albis, H. (2007) Demographic structure and capital accumulation. Journal of Economic Theory 132, 411–434.CrossRefGoogle Scholar
d'Albis, H. and Augeraud-Véron, E. (2009) Competitive growth in a life-cycle model: Existence and dynamics. International Economic Review 50, 459–484.CrossRefGoogle Scholar
de la Croix, D. and Michel, P. (2002) A Theory of Economic Growth: Dynamics and Policy in Overlapping Generations. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
De Moivre, A. (1725) Annuities upon lives. London. [Reprinted in The Doctrine of Chances, 3rd ed. (1756), 261–328.]Google Scholar
Diamond, P. A. (1965) National debt in a neoclassical growth model. American Economic Review 55, 1126–1150.Google Scholar
Docquier, F. and Michel, P. (1999) Education subsidies, social security and growth: The implications of a demographic shock. Scandinavian Journal of Economics 101, 425–440.CrossRefGoogle Scholar
Doepke, M. (2004) Accounting for fertility decline during the transition to growth. Journal of Economic Growth 9, 347–383.CrossRefGoogle Scholar
Edmond, C. (2008) An integral equation representation for overlapping generations in continuous time. Journal of Economic Theory 143, 596–609.CrossRefGoogle Scholar
Faruqee, H. (2003) Debt, deficits, and age-specific mortality. Review of Economic Dynamics 6, 300–312.CrossRefGoogle Scholar
Gan, Z. and Lau, S.-H. P. (2010) Demographic structure and overlapping generations: A simpler proof with more general conditions. Journal of Mathematical Economics 46, 311–319.CrossRefGoogle Scholar
Gompertz, B. (1825) On the nature of the function expressive of the law of human mortality, and on a new mode of determining the value of life contingencies. Philosophical Transactions of the Royal Society 115, 513–585.Google Scholar
Hazan, Moshe (2009) Longevity and lifetime labor supply: Evidence and implications. Econometrica 77 (6), 1829–1863.Google Scholar
Heijdra, B. J. and Ligthart, J. E. (2006) The macroeconomic dynamics of demographic shocks. Macroeconomic Dynamics 10, 349–370.CrossRefGoogle Scholar
Heijdra, B. J. and Mierau, J. O. (2010) Growth effects of consumption and labor-income taxation in an overlapping-generations life-cycle model. Macroeconomic Dynamics 14, 151–175.CrossRefGoogle Scholar
Heijdra, B. J. and Romp, W. E. (2008) A life-cycle over-lapping generations model of the small open economy. Oxford Economic Papers 60, 88–121.CrossRefGoogle Scholar
Kelley, A. C., (1988) Economic consequences of population change in the third world. Journal of Economic Literature 27, 1685–1728.Google Scholar
Kelley, A. C. and Schmidt, R. M. (1995) Aggregate population and economic growth correlations: The role of the components of demographic change. Demography 32, 543–555.CrossRefGoogle ScholarPubMed
Kohler, P.-H. and Kohler, I. (2000) Frailty modeling for adult and old age mortality: The application of a modified de Moivre hazard function to sex differentials in mortality. Demographic Research 3. http://www.demographic-research.org/Volumes/Vol3/8/.CrossRefGoogle Scholar
Lucas, R. E. (1988) On the mechanics of economic development. Journal of Monetary Economics 22, 3–42.CrossRefGoogle Scholar
Manuelli, R. E. and Seshadri, A. (2009) Explaining international fertility differences. Quarterly Journal of Economics 124, 771–807.CrossRefGoogle Scholar
Mierau, J. O. and Turnovsky, S. J. (2011) Capital Accumulation and the Sources of Demographic Change. Unpublished, University of Washington.Google Scholar
Nicolini, E. A. (2004) Mortality, interest rates, investment, and agricultural production in 18th century England. Explorations in Economic History 41, 130–155.CrossRefGoogle Scholar
Romer, P. M. (1986) Increasing returns and long-run growth. Journal of Political Economy 94, 1002–1037.CrossRefGoogle Scholar
Saint-Paul, J. (1992) Fiscal policy in an endogenous growth model. Quarterly Journal of Economics 104, 1243–1259.CrossRefGoogle Scholar
Samuelson, P. A. (1958) An exact consumption-loan model of interest with or without the social contrivance of money. Journal of Political Economy 66, 467–482.CrossRefGoogle Scholar
Soares, R. R. (2005) Mortality reductions, educational attainment, and fertility choices. American Economic Review 95, 580–601.Google Scholar
Tamai, T. (2009) Public capital, taxation and endogenous growth in a finite horizons model. Metroeconomica 60, 179–196.CrossRefGoogle Scholar
Weil, P. (1989) Overlapping families of infinitely-lived agents. Journal of Public Economics 38, 183–198.CrossRefGoogle Scholar
Yaari, M. E. (1965) Uncertain lifetime, life insurance, and the theory of the consumer. Review of Economic Studies 32, 137–150.CrossRefGoogle Scholar