Belyakov A.O., Kurbatskiy A.N., Prettner K.: «The growth effects of anticipated versus unanticipated population aging»
Anton О. Belyakov (Associate Professor, Deputy Head of Chair of General Economic Theory, PhD in Economics, Candidate of physics and mathematics), Alexey N. Kurbatsky (Associate Professor of the Chair of Econometrics and Mathematical Methods of Economics, PhD in Physics and Mathematics), Professor Klaus Prettner (Vienna University of Economics and Business, Austria) published an article «The growth effects of anticipated versus unanticipated population aging» in «Journal of Mathematical Economics» (2020, Elsevier BV, Netherlands).
Abstract
We analyze the effects of anticipated population aging within a general equilibrium R&D-based endogenous growth model with overlapping generations. In doing so we model aging as a rise of longevity and a simultaneous drop in fertility. In contrast to an unanticipated rise of longevity, consumers increase their savings and reduce their consumption long before the rise of longevity actually happens. This implies that individuals save more in anticipation of aging, which puts downward pressure on the interest rate and raises economic growth through an increase in R&D incentives. Irrespective of the anticipation effect, the economic change at impact is not smooth but still features a kink in consumption.