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Demographic structure and capital accumulation: A quantitative assessment

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  • Lau, Sau-Him Paul

Abstract

In a recent paper, d'Albis [2007. Demographic structure and capital accumulation. Journal of Economic Theory 132, 411-434] shows that the effect of population growth on capital accumulation is ambiguous in overlapping-generations models with age-specific mortality rates, contrasting to the predicted negative effect in Diamond [1965. National debt in a neoclassical growth model. American Economic Review 55, 1126-1150] and Blanchard [1985. Debt, deficits, and finite horizons. Journal of Political Economy 93, 223-247]. The quantitative exercises of this paper indicate that while in principle a positive relation between population growth and capital accumulation is possible, this relation is practically always negative for industrial countries. Intuition based on capital dilution and aggregate saving effects is provided. This paper also complements d'Albis [2007. Demographic structure and capital accumulation. Journal of Economic Theory 132, 411-434] in characterizing the steady-state equilibrium in more familiar economic concepts.

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  • Lau, Sau-Him Paul, 2009. "Demographic structure and capital accumulation: A quantitative assessment," Journal of Economic Dynamics and Control, Elsevier, vol. 33(3), pages 554-567, March.
    • Handle: RePEc:eee:dyncon:v:33:y:2009:i:3:p:554-567
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    4. Gan, Zhuojiong & Lau, Sau-Him Paul, 2010. "Demographic structure and overlapping generations: A simpler proof with more general conditions," Journal of Mathematical Economics, Elsevier, vol. 46(3), pages 311-319, May.
    5. Lau, Sau-Him Paul, 2014. "Fertility and mortality changes in an overlapping-generations model with realistic demography," Economic Modelling, Elsevier, vol. 38(C), pages 512-521.
    6. Bruce, Neil & Turnovsky, Stephen J., 2013. "Social security, growth, and welfare in overlapping generations economies with or without annuities," Journal of Public Economics, Elsevier, vol. 101(C), pages 12-24.
    7. D'ALBIS Hippolyte & AUGERAUD-VÉRON Emmanuelle, 2009. "Continuous-Time Overlapping Generations Models," LERNA Working Papers 09.15.291, LERNA, University of Toulouse.
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