Growth and the Ageing Joneses

Fisher, Walter H. and Heijdra, Ben J. (November 2008) Growth and the Ageing Joneses. Former Series > Working Paper Series > IHS Economics Series 230


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Abstract: We incorporate Keeping-up-with-the-Joneses (KUJ) preferences into the Blanchard-Yaari (BY) framework and develop, using an AK technology, a model of balanced growth. In this context we investigate status preference, demographic, and pension policy shocks. We find that a higher degree of KUJ lowers economic growth, while, in contrast, a decrease in the fertility and mortality rates increase it. In the second part of the paper we extend the model by incorporating a Pay-as-you-go (PAYG) pension system with a statutory retirement date. This introduces a life-cycle in human wealth earnings and implies that the growth rate is higher under PAYG. We also consider the implications of an increase in the retirement date under both defined benefit and defined contribution schemes.;

Item Type: IHS Series
Keywords: 'Relative consumption' 'OLG' 'Endogenous growth' 'Pension reform'
Classification Codes (e.g. JEL): D91, E21, H55
Date Deposited: 26 Sep 2014 10:38
Last Modified: 27 Sep 2019 06:30
ISBN: 1605-7996

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