TY - UNPB

T1 - Fiscal Policy Effects in a Heterogeneous-Agent OLG Economy with an Aging Population

AU - Nishiyama, Shinichi

PY - 2015

Y1 - 2015

N2 - 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.

AB - 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.

KW - dynamic general equilibrium

KW - heterogeneous agents

KW - overlapping generations

KW - aging population

KW - fiscal policy

M3 - Working paper

T3 - Economics Working Paper Series

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

PB - Lancaster University, Department of Economics

CY - Lancaster

ER -