Fanti, Luciano and Gori, Luca (2010): Fertility-related pensions and cyclical instability.
Download (162kB) | Preview
We show that the introduction of unfunded public pensions in a Cobb-Douglas economy with overlapping generations and endogenous fertility may cause complex economic cycles when individuals are short-sighted. In particular, the risk of cyclical instability increases with both the individual degree of thriftiness and the relative weight of individual fertility in the pension system. Our results provide a possible explanation of the occurrence of persistent cycles in an overlapping generations context and represent a policy warning about the dramatic destabilising effects of a fertility-related pension reform.
|Item Type:||MPRA Paper|
|Original Title:||Fertility-related pensions and cyclical instability|
|English Title:||Fertility-related pensions and cyclical instability|
|Keywords:||Endogenous fertility; Fertility-related pensions; Myopic foresight; OLG model|
|Subjects:||H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
J - Labor and Demographic Economics > J1 - Demographic Economics > J14 - Economics of the Elderly ; Economics of the Handicapped ; Non-Labor Market Discrimination
J - Labor and Demographic Economics > J1 - Demographic Economics > J18 - Public Policy
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J26 - Retirement ; Retirement Policies
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium
|Depositing User:||Luca Gori|
|Date Deposited:||26. Jan 2010 01:20|
|Last Modified:||29. Aug 2015 18:45|
Abio, G., Mahieu, G., Patxot, C., 2004. On the optimality of PAYG pension systems in an endogenous fertility setting. Journal of Pension Economics and Finance 3, 35–62.
Blinder, A.S., Krueger, A.B., 2004. What does the public know about economic policy, and how does it know it? Brookings Papers on Economic Activity 2004, 327–387.
Boeri, T., Börsch-Supan, A., Tabellini, G., 2001. Would you like to shrink the welfare state? A survey of European citizens. Economic Policy 16, 7–50.
Boeri, T., Börsch-Supan, A., Tabellini, G., 2002. Pension reforms and the opinions of European citizens. American Economic Review 92, 396–401.
Boldrin, M., Jones, L.E., 2002. Mortality, fertility and saving in a Malthusian economy. Review of Economic Dynamics 5, 775–814.
de la Croix, D., and Michel, P., 2002. A Theory of Economic Growth. Dynamics and Policy in Overlapping Generations. Cambridge University Press, Cambridge.
Diamond, P., 1965. National debt in a neoclassical growth model, American Economic Review 55, 1126–1150.
Eckstein, Z., Wolpin, K.I., 1985. Endogenous fertility and optimal population size. Journal of Public Economics 27, 93–106.
Fanti, L., Spataro, L., 2008. Poverty traps and intergenerational transfers, International Tax and Public Finance 15, 693–711.
Farmer, R.E., 1986. Deficits and cycles, Journal of Economic Theory 40, 77–86.
Fenge, R., Meier, V., 2005. Pensions and fertility incentives. Canadian Journal of Economics 38, 28–48.
Fenge, R., Meier, V., 2009. Are family allowances and fertility-related pensions perfect substitutes? International Tax and Public Finance 16, 137–163.
Fenge, R., von Weizsäcker, J., 2010. Mixing Bismarck and child pension systems: an optimum taxation approach. Journal of Population Economics, forthcoming.
Galor, O., Weil, D.N., 1996. The gender gap, fertility, and growth. American Economic Review 86, 374–387.
Grandmont, J.M., 1985. On endogenous business cycles, Econometrica 53, 995–1045.
Groezen, B. van, Meijdam, L., 2008. Growing old and staying young: population policy in an ageing closed economy. Journal of Population Economics 21, 573–588.
Groezen, B. van, Leers, T., Meijdam, L., 2003. Social security and endogenous fertility: pensions and child allowances as Siamese twins. Journal of Public Economics 87, 233–251.
Kolmar, M., 1997. Intergenerational redistribution in a small open economy with endogenous fertility. Journal of Population Economics 10, 335–356.
Michel, P., de la Croix, D., 2000. Myopic and perfect foresight in the OLG model. Economics Letters 67, 53–60.
Pecchenino, R.A., Pollard, P.S., 2005. Aging, myopia, and the pay-as-you-go public pension systems of the G7: A bright future?, Journal of Public Economic Theory 7, 449–470.
Reichlin, P., 1986. Equilibrium cycles in an overlapping generations economy with production, Journal of Economic Theory 40, 89–102.
Wigger, B.U., 1999. Pay-as-you-go financed public pensions in a model of endogenous growth and fertility. Journal of Population Economics 12, 625–640.
Zhang, J., Zhang, J., Lee, R., 2001. Mortality decline and long-run economic growth, Journal of Public Economics 80, 485–507.
Zhang, J., Zhang, J., Lee, R., 2003. Rising longevity, education, savings, and growth. Journal of Development Economics 70, 83–101.