An OLG Model of Endogenous Growth and Ageing
Paper number: 01/02
Paper date: May 10, 2001
Paper Category: Working Paper
Giam Pietro Cipriani and Miltos Makris
To study fully endogenous ageing alongside growth and their implications, this paper sets up an OLG economy in which the life expectancy of agents is endogenous. Agents are bearers of children, investors in education and producers and consumers of output. Retirement decision in the last period of life is also endogenous and, when retired, agents receive a pension that is financed by a PAYG system. The model features a unique asymptotically stable steady state. Accordingly it supports a plethora of short and medium-run dynamic paths to a uniquely defined long-run equilibrium depending on the functional forms, parameters and initial conditions. The model is then calibrated and some comparative static experiments on the effect of policy variables changes are conducted.