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Interest rates and endogenous population growth: joint age-dependent dynamics

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  • Brito, Paulo

Abstract

This paper presents a uncertain-lifetime overlapping-generations continuous time model for an Arrow-Debreu economy with endogenous fertility, in which age-dependent variables are explicitly introduced. The general equilibrium paths for the discount factor and newborns are derived from a system of two coupled forward-backward integral equations. The forward mechanism is related to aggregation between cohorts and the backward mechanism to life-cycle decisions. We study changes in the age-dependent profiles of age-dependent distributions for productivity and time use. We show that high maximum ages of productivity and child-rearing fitness increase the long run interest and growth rates, and low maximum ages can lead to asset pricing bubbles and negative population growth rates.

Suggested Citation

  • Brito, Paulo, 2014. "Interest rates and endogenous population growth: joint age-dependent dynamics," MPRA Paper 58656, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:58656
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    References listed on IDEAS

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    More about this item

    Keywords

    OLG; endogenous fertility; Arrow-Debreu; integral equations;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J1 - Labor and Demographic Economics - - Demographic Economics

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