This paper presents a dynamic model of general equilibrium for the Spanish economy characterized by a structure of overlapping generations. Households are differentiated by their age and gender and make their decisions in a probabilistic... more
This paper presents a dynamic model of general equilibrium for the Spanish economy characterized by a structure of overlapping generations. Households are differentiated by their age and gender and make their decisions in a probabilistic context with a finite time horizon. In addition, an explicit demographic module is used to project the population by age and gender so that the sensitivity of the solutions to alternative demographic scenarios can be examined. This tool simulates the impact of the pension reform recently approved in Spain. Also, the robustness of the results against alternative specifications of the fiscal rule of closure of the model is examined.
Population control policy in Iran during 1990's would cause in rapidly increasing elder population in coming decades. This fact led to significant financial burden and economic effects. As the families' ability and resources to fulfill... more
Population control policy in Iran during 1990's would cause in rapidly increasing elder population in coming decades. This fact led to significant financial burden and economic effects. As the families' ability and resources to fulfill their demands vanish, governmental support programs to establish higher social welfare to the olds and prevention of poverty get higher priority. In this study, Aurebach-Kottlikoff overlapping generations model is used to simulate the impact of population aging on Iran's economy in a 300-year period based on social security balanced budget. Driving force of the model is demographic evolution which is exogenous. Based on UN median population forecast scenario, Iran's population growth rate decreases from %1.2 to %0 by 2040. Our results indicate that population growth rate reduction results in labor supply reduction that would lead to increasing capital to labor ratio, and thereby decrease capital cast, lower interest rate and increasing in wag rates. Lower population growth rate in addition to contribution rate changes lead to make young generation pay higher social security contribution rate and tax. Results show that demographic changes have impact on welfare priorities. According to these demographic changes, priorities welfare is threatened and creates inequality between generations.
Due to considerable financial sustainability concerns, Turkey has reformed her social security system. The last leg of this reform process took place in 2008 and included changes in replacement and contribution rates. This paper aims to... more
Due to considerable financial sustainability concerns, Turkey has reformed her social security system. The last leg of this reform process took place in 2008 and included changes in replacement and contribution rates. This paper aims to analyse the impact of the parameter changes on financial sustainability of the system and the consumer well-being. Focus of the analysis is on the changes in the replacement rates and the contribution rates. The paper contributes by providing a complex quantitative analysis of the parameter changes through an OLG (overlapping generations) model. It is found that the simultaneous reduction of replacement and contribution rates is a reform design flaw and actually worsens the deficits of the system. One other finding is that the closer a person is to retirement at the time of the reform, the worse the impact of the reform is on the person.
We analyse the dynamics of an economy formed of overlapping generations of individuals whose well-being depends on leisure, consumption of a private good and a free access environmental resource. The production activity of the private... more
We analyse the dynamics of an economy formed of overlapping generations of individuals whose well-being depends on leisure, consumption of a private good and a free access environmental resource. The production activity of the private good deteriorates the environmental resource. Individuals may defend themselves from environmental degradation by increasing consumption of the private good, which may be perceived as a “substitute” for services provided by the environmental resource. However, the resulting increase in production and consumption of the private good generates a further increase in environmental deterioration leading economic agents to increase production and consumption of the private good itself. This substitution mechanism is clearly self-reinforcing and may fuel an undesirable economic growth process according to which an increase in consumption of the private good – and the resulting increase in Gross Domestic Product – is associated with a reduction in individuals’ well-being. The article shows the emergence of several global phenomena, and individuals’ expectations about the future evolution of the environmental quality can give rise to (local and global) indeterminacy about the growth path the economy will follow starting from a given initial position.
Mediante un modelo de equilibrio general computable, en el que se discrimina un sector informal en la economía, se modela el sector formal como un mercado de competencia monopolística. Además de incluir mercados de trabajo discriminados,... more
Mediante un modelo de equilibrio general computable, en el que se discrimina un sector informal en la economía, se modela el sector formal como un mercado de competencia monopolística. Además de incluir mercados de trabajo discriminados, este modelo también evalúa el impacto del creciente flujo de inversión extranjera, del aumento de precio de los bienes básicos, y del aumento del volumen de las exportaciones sobre la economía colombiana. Se concluye que algo más de la mitad del crecimiento observado puede explicarse por el efecto de los factores mencionados. No obstante, se señala la importancia de las políticas internas para aprovechar las coyunturas favorables, y para minimizar el efecto de circunstancias negativas sobre el desempeño económico.
This paper develops an overlapping generations model to study the macroeconomic effects of an unexpected elimination of Medicare. We find that a large share of the elderly respond by substituting Medicaid for Medicare. Consequently, the... more
This paper develops an overlapping generations model to study the macroeconomic effects of an unexpected elimination of Medicare. We find that a large share of the elderly respond by substituting Medicaid for Medicare. Consequently, the government saves only 46 cents for every dollar cut in Medicare spending. We argue that a comparison of steady states is insufficient to evaluate the welfare effects of the reform. In particular, we find lower ex-ante welfare gains from eliminating Medicare when we account for the costs of transition. Lastly, we find that a majority of the current population benefits from the reform but that aggregate welfare, measured as the dollar value of the sum of wealth equivalent variations, is higher with Medicare.
چکیده توسعه اقتصادی، پیشرفت های حوزه سلامت و بهبود سطوح زندگی به موازات کاهش هر ساله نرخ باروری در ایران، در سال های اخیر افزایش طول عمر و رشد نسبت افراد سالمند در کشور را به دنبال داشته است. گذار ساختار سنی جمعیت به یک جمعیت سالمند، نوع... more
چکیده توسعه اقتصادی، پیشرفت های حوزه سلامت و بهبود سطوح زندگی به موازات کاهش هر ساله نرخ باروری در ایران، در سال های اخیر افزایش طول عمر و رشد نسبت افراد سالمند در کشور را به دنبال داشته است. گذار ساختار سنی جمعیت به یک جمعیت سالمند، نوع و کیفیت و چرخه زندگی اقتصادی و نیاز¬های اجتماعی را برای هر دو نسل جوان و سالمند تغییر می دهد. بنابراین مطالعه تأثیر این پدیده در حوزه اقتصاد کلان، رفاه و تأمین اجتماعی دارای اهمیت است. در این مطالعه از یک مدل تعادل عمومی نسلهای همپوش اوئرباخ-کوتلیکوف چهار بخشی شامل بخش های خانوار، بنگاه، دولت و تأمین اجتماعی استفاده شده است. یافته ها نشان می دهد کاهش در نرخ رشد جمعیت، افزایش پس¬انداز کارگران مسن تر با بهره وری بالا نسبت به کارگران جوان تر با بهره وری پایین را درپی¬دارد. به همین ترتیب آنان دارای عرضه نیروی کار بالاتری نسبت به کارگران با بهره وری پایین هستند و در مقابل، افراد مسن تر مدت زمان طولانی تری را به کار اختصاص می دهند در حالیکه افراد جوان تر عرضه نیروی کار بیشتری دارند. همچنین افراد، پس-اندازها و دارایی هایی حاصله طی فعالیت های اقتصادی خود را در دوره اول بازنشستگی خرج می کنند و کاهش ناگهانی مصرف در سن بازنشستگی در سال های آخر اشتغال قابل مشاهده است. کلمات کلیدی: مدل نسلهای همپوش ، سالمندی جمعیت، بازنشستگی، بهره¬وری، اقتصاد کلان
We analyze an overlapping generations model where individuals' well-being is negatively affected by the economy-wide average consumption level. Each individual aims at increasing his consumption level relatively to that of the others. We... more
We analyze an overlapping generations model where individuals' well-being is negatively affected by the economy-wide average consumption level. Each individual aims at increasing his consumption level relatively to that of the others. We show that this " positional competition " can generate (local and global) indeterminacy and chaos. ANGELO ANTOCI, AHMAD NAIMZADA and MAURO SODINI 66
This paper presents a general equilibrium model in which nominal government debt pays an inflation risk premium. The model predicts that the inflation risk premium will be higher in economies which are exposed to unanticipated inflation... more
This paper presents a general equilibrium model in which nominal government debt pays an inflation risk premium. The model predicts that the inflation risk premium will be higher in economies which are exposed to unanticipated inflation through nominal asset holdings. In particular, the inflation risk premium is higher when government debt is primarily nominal, steady-state inflation is low, and when cash and nominal debt account for a large fraction of consumers’ retirement portfolios. These channels do not appear to have been highlighted in previous models or tested empirically. Numerical results suggest that the inflation risk premium is comparable in magnitude to standard representative agent models. These findings have implications for management of government debt, since the inflation risk premium makes it more costly for governments to borrow using nominal rather than indexed debt. Simulations of an extended model with Epstein-Zin preferences suggest that increasing the share...
In this paper, we show that incorporating the relational dimension into an otherwise standard OLG model and focusing on dynamic leisure externalities leads to dramatically different predictions. Here, we show that when the old perceive... more
In this paper, we show that incorporating the relational dimension into an otherwise standard OLG model and focusing on dynamic leisure externalities leads to dramatically different predictions. Here, we show that when the old perceive private and relational consumption as substitutable goods, a series of interesting dynamic outcomes—such as local indeterminacy, nonlinear phenomena (including chaotic dynamics) and even multiple equilibria with global indeterminacy—may arise. We also draw some welfare implications and relate them to the well-known " happiness paradox " arising within contemporary affluent societies.
