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

Finite Lifetimes, Population, and Growth

2015

This work highlights principle differences in the predictions of R&D-based growth theory derived from the infinite horizon framework and the Overlapping Generations (OLG) framework of finitely living agents. In particular we show that the counterfactual positive effect of population growth on output growth presented in the second and third generation R&D-based growth models is eliminated in the corresponding OLG framework with finitely living agents. These differences arise because of the limiting effect of labor income on saving that presents only in the OLG framework. Our results indicate that the counterfactual relations between population and output growth rates presented in current R&D-based growth models are driven by their specific demographic structure.

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.

The role of demography on per capita output growth and saving rates

2011

Computable OLG growth models and "convergence models" differ in their assessment of the extent to which demography influences economic growth. In this paper, I show that computable OLG growth models produce results similar to those of convergence models when more detailed demographic information is used. To do so, I implement a general equilibrium overlapping generations model to explain Taiwan's economic

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.

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 resources. We know from Scholz and Ziemens (1999) and 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 resources 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. Nevertheless, we find that active R&D policies always imply increases in the endogenous growth rate, in both scenarios. Furthermore, when the IES coefficient is lower (greater) than one, active R&D policies affect the growth rate of the economy in the ILA more (less) than in OLG economies.

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...

Saving and Growth: A Reinterpretation

We examine the relationship between income growth and saving using both cross-country and household data. At the aggregate level, we find that growth Granger causes saving, but saving does not Granger cause growth. Using household data, we find that households with predictably higher income growth save more than households with predictably low growth. We argue that standard permanent income models of consumption cannot explain these findings, but, a model of consumption with habit formation may. The positive effect of growth on saving implies that previous estimates of the effect of saving on growth may be overstated.

Contribution of demography to economic growth

SERIEs

From 1850 to 2000, in Western European countries life expectancy rose from 30-40 to 80 years and the average number of children per woman fell from 4 to 5 children to slightly more than one. To gauge the economic consequences of these demographic trends, we implement an overlapping generations model with heterogeneity by level of education in which individuals optimally decide their consumption of market-and home-produced goods as well as the time spent on paid and unpaid work. We find that around 17% of the observed increase in per-capita income growth from 1850 to 2000 was due to the demographic transition. Around 50% of the demo