IDEAS home Printed from https://ideas.repec.org/p/max/cprwps/27.html
   My bibliography  Save this paper

Worldwide Population Aging: Endogenous Policy Formation and Capital Market Transmissions in the Presence of Symmetric Demographic Shocks

Author

Listed:
  • Mehmet Serkan Tosun

Abstract

This paper examines the transition effects of population aging in more developed regions that is also expected to occur in developing regions in the near future. We address these effects by exploring the influences of internationally mobile capital and a politically responsive fiscal policy in a two-country overlapping generations model. Our results show that the combination of capital mobility and endogenous fiscal policy play an important role in how economies respond to population aging. Capital mobility has consumption smoothing effects but endogenous fiscal policy is the key factor in creating asymmetries between countries. The interaction of the two may even account for a change in the pattern, in addition to a change in the size, of the effects of population aging on economic growth and welfare when compared to closed economy and exogenous fiscal policy models. We find that even when the demographic shock in the two regions is symmetric, reaction to this shock depends on the timing of the shock. Overall, the late, developing country demographic shock produces relatively more favorable economic outcomes worldwide. Finally, our analysis of the timing of developing country aging indicates that an early aging scenario is more beneficial for both regions.

Suggested Citation

  • Mehmet Serkan Tosun, 2000. "Worldwide Population Aging: Endogenous Policy Formation and Capital Market Transmissions in the Presence of Symmetric Demographic Shocks," Center for Policy Research Working Papers 27, Center for Policy Research, Maxwell School, Syracuse University.
    • Handle: RePEc:max:cprwps:27
    as

    Download full text from publisher

    File URL: https://surface.syr.edu/cpr/128/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Douglas Holtz-Eakin & Mary E. Lovely & Mehmet S. Tosun, 2000. "Generational Conflict, Human Capital Accumulation, and Economic Growth," NBER Working Papers 7762, National Bureau of Economic Research, Inc.
    2. Paul R. Masson & Ralph W. Tryon, 2019. "Macroeconomic Effects of Projected Population Aging in Industrial Countries," World Scientific Book Chapters, in: Macroeconomic Modelling and Monetary and Exchange Rate Regimes, chapter 2, pages 17-56, World Scientific Publishing Co. Pte. Ltd..
    3. Buiter, Willem H, 1981. "Time Preference and International Lending and Borrowing in an Overlapping-Generations Model," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 769-797, August.
    4. Meijdam, Lex & Verbon, Harrie A A, 1996. "Aging and Political Decision Making on Public Pensions," Journal of Population Economics, Springer;European Society for Population Economics, vol. 9(2), pages 141-158, May.
    5. Holtz-Eakin, Douglas, 1993. "Demographics, Political Power and Economic Growth," Public Finance = Finances publiques, , vol. 48(Supplemen), pages 349-365.
    6. Matthew E. Kahn, 2002. "Demographic change and the demand for environmental regulation," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(1), pages 45-62.
    7. James M. Poterba, 1997. "Demographic structure and the political economy of public education," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(1), pages 48-66.
    8. Dave Turner & Claude Giorno & Alain de Serres & Ann Vourc'h & Pete Richardson, 1998. "The Macroeconomic Implications of Ageing in a Global Context," OECD Economics Department Working Papers 193, OECD Publishing.
    9. David M. Cutler & James M. Poterba & Louise M. Sheiner & Lawrence H. Summers, 1990. "An Aging Society: Opportunity or Challenge?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1), pages 1-74.
    10. repec:fth:harver:1490 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Douglas Holtz-Eakin & Mary E. Lovely & Mehmet Serkan Tosun, 2000. "Generational Conflict, Human Capital Accumulation, and Economic Growth," Center for Policy Research Working Papers 28, Center for Policy Research, Maxwell School, Syracuse University.
    2. Holtz-Eakin, Douglas & Lovely, Mary E. & Tosun, Mehmet S., 2004. "Generational conflict, fiscal policy, and economic growth," Journal of Macroeconomics, Elsevier, vol. 26(1), pages 1-23, March.
    3. Frank T. Denton & Byron G. Spencer, 1998. "Economic Costs of Population Aging," Quantitative Studies in Economics and Population Research Reports 339, McMaster University.
    4. Mr. Mehmet S Tosun, 2005. "Global Aging and Fiscal Policy with International Labor Mobility: A Political Economy Perspective," IMF Working Papers 2005/140, International Monetary Fund.
    5. Ross S. Guest & Ian M. Mcdonald, 2004. "Effect of World Fertility Scenarios on International Living Standards," The Economic Record, The Economic Society of Australia, vol. 80(s1), pages 1-12, September.
    6. Tosun, Mehmet Serkan, 2003. "Population aging and economic growth: political economy and open economy effects," Economics Letters, Elsevier, vol. 81(3), pages 291-296, December.
    7. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    8. Adema, Y. & Meijdam, A.C. & Verbon, H.A.A., 2006. "Beggar Thy Thrifty Neighbour : The International Spillover Effects of Pensions Under Population Ageing," Other publications TiSEM efe74edb-cddd-4a64-8889-9, Tilburg University, School of Economics and Management.
    9. Dekle, Robert, 2004. "Financing consumption in an aging Japan: The role of foreign capital inflows and immigration," Journal of the Japanese and International Economies, Elsevier, vol. 18(4), pages 506-527, December.
    10. Meijdam, Lex & Verbon, Harrie A A, 1997. "Aging and Public Pensions in an Overlapping-Generations Model," Oxford Economic Papers, Oxford University Press, vol. 49(1), pages 29-42, January.
    11. Faruqee, Hamid & Muhleisen, Martin, 2003. "Population aging in Japan: demographic shock and fiscal sustainability," Japan and the World Economy, Elsevier, vol. 15(2), pages 185-210, April.
    12. Equipe INGENUE, 2001. "Macroeconomic consequences of pension reforms in Europe: an investigation with the INGENUE world model," CEPREMAP Working Papers (Couverture Orange) 0116, CEPREMAP.
    13. Aglietta, Michel & Chateau, Jean & Fayolle, Jacky & Juillard, Michel & Le Cacheux, Jacques & Le Garrec, Gilles & Touze, Vincent, 2007. "Pension reforms in Europe: An investigation with a computable OLG world model," Economic Modelling, Elsevier, vol. 24(3), pages 481-505, May.
    14. F.L. MacKellar & T.Y. Ermolieva & H. Reisen, 1999. "Globalization, Social Security, and International Transfers," Working Papers ir99056, International Institute for Applied Systems Analysis.
    15. F.L. MacKellar & H. Reisen, 1998. "International Diversification of Pension Assets Is No Panacea for Population Aging," Working Papers ir98034, International Institute for Applied Systems Analysis.
    16. Michael Feroli, 2003. "Capital flows among the G-7 nations: a demographic perspective," Finance and Economics Discussion Series 2003-54, Board of Governors of the Federal Reserve System (U.S.).
    17. Börsch-Supan, Axel, 2004. "Global Aging: Issues, Answers, More Questions," MEA discussion paper series 04055, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    18. Joachim Ragnitz & Stefan Eichler & Beate Henschel & Harald Lehmann & Carsten Pohl & Lutz Schneider & Helmut Seitz & Marcel Thum, 2007. "Die demographische Entwicklung in Ostdeutschland : Gutachten im Auftrag des Bundesministeriums für Wirtschaft und Technologie," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 41.
    19. Mehmet Serkan Tosun, 2004. "Population Aging, Labor Mobility, and Economic Growth: Evidence From MENA and the Developed World," Working Papers 0417, Economic Research Forum, revised Aug 2004.
    20. Beetsma, Roel & Bettendorf, Leon & Broer, Peter, 2003. "The budgeting and economic consequences of ageing in the Netherlands," Economic Modelling, Elsevier, vol. 20(5), pages 987-1013, September.

    More about this item

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:max:cprwps:27. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Katrina Fiacchi (email available below). General contact details of provider: https://edirc.repec.org/data/cpsyrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.