AI helps you reading Science

AI generates interpretation videos

AI extracts and analyses the key points of the paper to generate videos automatically


pub
Go Generating

AI Traceability

AI parses the academic lineage of this thesis


Master Reading Tree
Generate MRT

AI Insight

AI extracts a summary of this paper


Weibo:
In this paper it is shown that the optimal reaction to demographic changes strongly depends on the inter temporal utility function used as well as on the question whether agents are altruistic or not, a point that has largely been neglected in the literature so far

Altruism and the macroeconomic effects of demographic changes.

Journal of population economics, no. 3 (1997): 317-334

Cited by: 4|Views8
WOS

Abstract

"In this paper we show that the macroeconomic effects of demographic changes strongly depend on the degree of altruism and on the specification of the intertemporal utility function. We allow for agents either to be altruistic in the sense of Barro (1974) or non-altruistic. In the latter case, generations are heterogeneous like in the ¿un...More

Code:

Data:

0
Introduction
  • The baby boom in the sixties and the current ageing process in most Wes? tern countries have brought about a lively debate among economists about

    All correspondence to Lex Meijdam.
  • Other example of this literature is Yoo (1994), who compares the effects of a baby-boom/baby-bust in the dependency-ratio model of Cutler et al, in a standard neoclassical growth model, and in a Diamond overlapping-genera tions model.
  • His conclusion is that the different models lead to results that are qualitatively the same.
  • There are, two important points that should be taken into ac?
Highlights
  • The baby boom in the sixties and the current ageing process in most Wes? tern countries have brought about a lively debate among economists about

    All correspondence to Lex Meijdam
  • In this paper we show that the macroeconomic effects of demographic changes strongly depend on how altruism is modelled
  • Weil Temporary recession Temporary recession followed by permanent boom boom
  • In this paper it is shown that the optimal reaction to demographic changes strongly depends on the inter temporal utility function used as well as on the question whether agents are altruistic or not, a point that has largely been neglected in the literature so far
  • As shown in this table, the results of demographic shocks in case of a Ramsey model with a Millian utility function may be exactly opposite to the result when a Benthamite utility function is employed
  • For instance, ageing leads to an increase in consumption which causes a temporary decrease in the capital stock. This behaviour corresponds to the optimal reaction to ageing for the United States presented by Cutler et al (1990)
Results
  • The initial increase in con? sumption is due to the fact that human wealth jumps upward by more than 6%.
Conclusion
  • There is a large and fastly growing literature on the macroeconomic effects of demographic changes as e.g. ageing or the sudden ending of a baby

    Ageing Baby-boom/baby-bust

    Ramsey + Benthamite Temporary recession Status quo Ramsey + Millian Permanent boom Temporary deep recession

    Weil Temporary recession Temporary recession followed by permanent boom boom.
  • The results of demographic shocks in case of a Ramsey model with a Millian utility function may be exactly opposite to the result when a Benthamite utility function is employed
  • In the latter case, for instance, ageing leads to an increase in consumption which causes a temporary decrease in the capital stock.
  • In an otherwise identical Ramsey model a Millian utility function is used, the optimal reaction to the same impulse may be to initially decrease consumption and to increase capital accumulation, leading to a permanent boom.
  • The results in a non-altruistic model are on average in between the opposite results for the two Ramsey models
Summary
  • Introduction:

    The baby boom in the sixties and the current ageing process in most Wes? tern countries have brought about a lively debate among economists about

    All correspondence to Lex Meijdam.
  • Other example of this literature is Yoo (1994), who compares the effects of a baby-boom/baby-bust in the dependency-ratio model of Cutler et al, in a standard neoclassical growth model, and in a Diamond overlapping-genera tions model.
  • His conclusion is that the different models lead to results that are qualitatively the same.
  • There are, two important points that should be taken into ac?
  • Results:

    The initial increase in con? sumption is due to the fact that human wealth jumps upward by more than 6%.
  • Conclusion:

    There is a large and fastly growing literature on the macroeconomic effects of demographic changes as e.g. ageing or the sudden ending of a baby

    Ageing Baby-boom/baby-bust

    Ramsey + Benthamite Temporary recession Status quo Ramsey + Millian Permanent boom Temporary deep recession

    Weil Temporary recession Temporary recession followed by permanent boom boom.
  • The results of demographic shocks in case of a Ramsey model with a Millian utility function may be exactly opposite to the result when a Benthamite utility function is employed
  • In the latter case, for instance, ageing leads to an increase in consumption which causes a temporary decrease in the capital stock.
  • In an otherwise identical Ramsey model a Millian utility function is used, the optimal reaction to the same impulse may be to initially decrease consumption and to increase capital accumulation, leading to a permanent boom.
  • The results in a non-altruistic model are on average in between the opposite results for the two Ramsey models
Tables
  • Table1: The effects of demographic changes on the capital stock
  • Table2: Critical value of the rate of risk aversion (? = 0)
Download tables as Excel
Funding
  • The initial increase in con? sumption is due to the fact that human wealth jumps upward by more than 6%
Reference
  • Ascher UM, Mattheij RMM, R?ssel RD (1988) Numerical Solutions of Boundary Value Prob? lems for Ordinary Differential Equations. Prentice Hall, Englewood Cliffs, NJ
    Google ScholarFindings
  • Barro RJ (1974) Are Government Bonds Net Wealth? Journal of Political Economy 81(6):1095-1117
    Google ScholarLocate open access versionFindings
  • Barro RJ, Sala-i-Martin X (1995) Economic Growth. McGraw-Hill, New York Becker GS, Barro RJ (1988) A Reformulation of the Theory of Fertility. Quarterly Journal of
    Google ScholarLocate open access versionFindings
  • Economics 103:1-25 Blanchard OJ, Fischer S (1989) lectures on Macroeconomics. MIT Press, Cambridge Calvo GA, Obstfeld M (1988) Optimal Time-Consistent Fiscal Policy with Finite Lifetimes.
    Google ScholarLocate open access versionFindings
  • Econometrica 56(2):411-432 Cigno A (1993) Intergenerational Transfers without Altruism. European Journal of Political
    Google ScholarLocate open access versionFindings
  • Economy 9:505-518 Cigno A, Rosati FC (1992) The Effects of Financial Markets and Social Security on Saving and Fertility Behaviour in Italy. Journal of Population Economics 5:319-341 Cigno A, Rosati FC (1996) Jointly Determined Saving and Fertility Behaviour: Theory, and
    Google ScholarLocate open access versionFindings
  • Estimates for Germany, Italy, UK and USA. European Economic Review 40:1561-1589 Cutler DM, Poterba JM, Sheiner LM, Summers LH (1990) An Aging Society: Opportunity or
    Google ScholarLocate open access versionFindings
  • Challenge? Brookings Papers on Economic Activity 1:1-73 Diamond P (1965) National Debt in a Neoclassical Growth Model. American Economic
    Google ScholarLocate open access versionFindings
  • Review 55(5): 1126-1150 Ihori T (1990) Government Spending and Private Consumption. Canadian Journal of Eco?
    Google ScholarFindings
  • nomics 23(l):60-69 Judd KL (1982) An Alternative to Steady-State Comparison in Perfect Foresight Models. Eco?
    Google ScholarLocate open access versionFindings
  • nomics Letters 10:55-59 Mankiw NG (1987) Government Purchases and Real Interest Rates. Journal of Political
    Google ScholarLocate open access versionFindings
  • Economy 95(2):407-419 Meijdam AC, Verbon HAA (1997) Aging and Public Pensions in an Overlapping-Genera tional Model. Oxford Economic Papers 49:29^2 Nerlove M (1988) Population Policy and Individual Choice. Journal of Population Economics
    Google ScholarLocate open access versionFindings
  • 1:17-31 Nerlove M, Razin A, Sadka E (1982) Population Size and the social welfare functions of
    Google ScholarFindings
  • Bentham and Mill. Economics Letters 10:61-64 Nerlove M, Razin A, Sadka E (1985) Population Size: Individual Choice and Social Optima.
    Google ScholarLocate open access versionFindings
  • Quarterly Journal of Economics 100:321-334 Palivos T, Yip CK (1993) Optimal Population Size and Endogenous Growth. Economics
    Google ScholarLocate open access versionFindings
  • Letters 41:107-110 Sidgwick H (1874) The Methods of Ethics, 1st edn. Macmillan, London Sumner LW (1978) Classical Utilitarianism and Population Optimum. In: Sikora RI, Barry B
    Google ScholarLocate open access versionFindings
  • (eds) Obligations to Future Generations. Temple University Press, Philadelphia Weil P (1989) Overlapping Families of Infinitely-Lived Agents. Journal of Monetary Econom?
    Google ScholarLocate open access versionFindings
  • ics 38(2)183-198 Yoo P (1994) Boom or Bust? The Economic Effects of the Baby Boom. Federal Reserve
    Google ScholarLocate open access versionFindings
Your rating :
0

 

Tags
Comments
小科