Finite Lifetimes, Population, and Growth (original) (raw)

On finite life times and growth

Journal of Macroeconomics, 1996

On Finite Life Times and Growth Following Diamond (1965), most authors assume that "capital argument of the production function is the saving of the previous period,'" but ignore this lag in determining the capital price. In an overlapping generations model with production lags, growth is feasible if capital productivity is sufficiently high and borrowing is for capital services. If labor services must also be financed, that is, if wages should be paid in advance, then steady growth is infeasible, if capital is fully owned by the old. Our results highlight the crucial role played by time-structure of production in the determination of growth process.

Life‐Cycle Saving, Bequests, and the Role of Population in R&D‐based Growth

This study shows how the two alternative saving motives, life-cycle consumption smoothing and parental bequests, determine the relation between population growth and R&D-based economic growth, i.e. the sign of the "weak scale-e¤ect". We take a textbook R&D-based growth model of in…nitely living agents with no weak-scale e¤ect, and analyze it in an Overlapping Generations framework -with and without bequest saving-motive. We show how the di¤erent saving motives determine the relation between population growth and per-capita income growth, which proves to be ambiguous in general, and may also be non-monotonic. Hence, we conclude that the counterfactual weak-scale e¤ect that is present in the second and third generations of R&D-based growth models of in…nitely-living agents depends on their speci…c demographic structure, and thus is not inherent to R&D-based growth theory itself. JEL Classi…cation: : O-31, O-40

Anticipated Expansions of Life Expectancy and Their Long-Run Growth Effects

Managing Geostrategic Issues, 2019

We analyse the long-run economic growth effects of an anticipated rise of longevity and a simultaneous drop of fertility within the general equilibrium of an R&D-based endogenous growth model with horizontal innovations and overlapping generations. In anticipation of the rise in longevity consumers increase their savings and reduce consumption, long before the rise of longevity actually happens. Nevertheless, the change of the balanced growth path is not smooth; there is still a small sharp fall of consumption because of the drop in fertility.

Demography and Growth: A Unified Treatment of Overlapping Generations

Macroeconomic Dynamics, 2012

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.

Growth and Longevity from the Industrial Revolution to the Future of an Aging Society

2006

Abstract: Aging of the population will affect the growth path of all countries. To assess the historical and future importance of this claim we use two popular approaches and evaluate their merits and disadvantages by confronting them to Swedish data. We first simulate an endogenous growth model with human capital linking demographic changes and income growth. Rising longevity increases the incentive to get education, which in turn has ever-lasting effects on growth through a human capital externality.

Growth on a Finite Planet: Resources, Technology and Population in the Long Run

SSRN Electronic Journal, 2011

We study the interactions between technological change, resource scarcity and population dynamics in a Schumpeterian model with endogenous fertility. We …nd a pseudo-Malthusian equilibrium in which population is constant and determined by resource scarcity while income grows exponentially. If labor and resources are substitutes in production, income and fertility dynamics are selfbalancing and the pseudo-Malthusian equilibrium is the global attractor of the system. If labor and resources are complements, income and fertility dynamics are self-reinforcing and drive the economy towards either demographic explosion or collapse. Introducing a minimum resource requirement per capita, we obtain constant population even under complementarity.

Life expectancy, retirement and endogenous growth

Economic Modelling, 2004

In this paper I address the links between life expectancy, retirement age and economic growth. I build a finite horizon OLG model with exogenous retirement in which human capital accumulation drives endogenous growth. The return on individual investment in human capital depends positively on the remaining active years. Postponing retirement age raises the return and investment in human capital, and the proportion of working individuals, thus increasing the sustainable growth rate. Increments in life expectancy do not increase the growth rate by themselves, but reduce it: optimal investment in human capital is not affected and the proportion of retirees becomes larger. Therefore, increases in life expectancy lead to higher growth rates only if they are accompanied by simultaneous increments in the working period.

R&D Policy in Economies with Endogenous Growth and Non-Renewable Resources∗

2007

The aim of this paper is to analyze how active R&D policies affect the growth rate of an economy with endogenous growth and non-renewable re-sources. We know from Scholz and Ziemens (1999) and Groth (2006) that in infinitely lived agents (ILA) economies, any active R&D policy increases the growth rate of the economy. To see if this result also appears in economies with finite lifetime agents, we developed an endogenous growth overlapping generations (OLG) economy à la Diamond which uses non-renewable re-sources as essential inputs in final good’s production. We show analytically that any R&D policy that reduces the use of natural resources implies a raise in the growth rate of the economy. Numerically we show that in economies with low intertemporal elasticity of substitution (IES), active R&D policies lead the economy to increase the depletion of non-renewable resources. Nev-ertheless, we find that active R&D policies always imply increases in the endogenous growth rate, in both sc...