Principal Investigator: Ben J. Heijdra
Research topic: Non-Traded Goods, Aging, and Pensions in Open Economies.
Scope of the project
The analysis draws on two main bodies of literature. First, in order to allow for
overlapping generations (OG) and the possibility of Ricardian non-equivalence, the
framework originally developed by Yaari and Blanchard and further extended by
Buiter, will be employed. By distinguishing birth and death rates, the model can study
demographic shocks both with and without Ricardian equivalence. The project
enriches the OG framework by allowing for age-dependent productivity (to capture
the notion of saving for a rainy day) and by including a simple PAYG pension system.
The second key building block concerns exposed and sheltered production sectors.
The sheltered sector producing non-traded goods produces only for home
absorption, and as a result the real exchange rate is determined endogenously within
the model. While financial capital is mobile internationally, international physical
capital mobility is limited.
Research goals
This project explores how aging and pension reforms affect open economies. It
focuses in the roles of overlapping generations, non-traded goods and imperfectly
mobile physical capital. Employing small-scale analytical models, this research
clarifies the core mechanisms through which aging, pensions, and pension reform
affect the macro economy.
Extensions
This project extends this framework by incorporating endogenous retirement
decisions, age- and time-dependent birth and death rates, and age-dependent
propensities to consume (non-traded) goods and leisure. The project also extends
the analysis so that factor-price equalization no longer holds by recognizing sector-specific
factors, limiting intersectoral capital mobility, and introducing non-competitive
goods markets. The extended framework will be employed to explore various
pension reforms, including the transition from pay-as-you-go to funded pension plans
and an increase in the retirement age.
Downloadable documents
- Slides for my presentation at the Netspar
Pension Day, May 12, 2005.
- Slides for my presentation at the Netspar
Lunch Seminar, December 8, 2005. (These are the slides I would have discussed had the beamer
not expired on me!)
- Slides for my presentation at the Netspar
Pension Day, February 16, 2006.
- Website for the June 2007 Netspar Pension
Workshop that I organized. This workshop took place on June 7-8 in the wonderful Golden Tulip Hotel in Paterswolde.
Keynote speakers were Eytan Sheshinski and Karl Scholz. Invaluable logistical support was received from Astrid Beerta (SOM),
Sylvia Geurdes and Sylvia Drogenbroek (both Netspar).
- Slides for my comments on Armstrong, Draper, and Westerhout, Netspar
kickoff meeting, November 22, 2007.
- Slides for my comments on Jaag, Keuschnigg, and Keuschnigg, Netspar
Pension Workshop, January 30, 2008.
- Slides for my presentation at the Netspar
Pension Workshop, June 25, 2008.
Contact:
Ben J. Heijdra
Faculty of Economics
PO Box 800
9700 AV Groningen
The Netherlands
Phone:
+31-(0)50-363-7303 (work)
+31-(0)50-363-7018 (secretary)
Fax:
(0)50-363-7337
E-mail:
info@heijdra.org
Last changed on 27 June 2008 by Ben Heijdra