Increasing life expectancy and optimal retirement in general equilibrium (Q2447171): Difference between revisions

The authors consider the problem of the impact of ``changes in longevity on the interest rate, the consumption-saving behavior, and the optimal retirement decision within a dynamic general equilibrium setting''. The predecessors of this investigation are papers by \textit{D. E. Bloom} et al. [``Demographic change, social security systems, and savings'', J. Monet. Econ. 54, No. 1, 92--114 (2007; \url{doi:10.1016/j.jmoneco.2006.12.004})], \textit{K. Matsuyama} [``A one-sector neoclassical growth model with endogenous retirement'', Jap. Econ. Rev. 59, No. 2, 139--155 (2008)] and \textit{B. J. Heijdra} and \textit{W. E. Romp} [``Retirement, pensions, and ageing'', J. Pub. Econ. 93, No. 3--4, 586--604 (2009; \url{doi:10.1016/j.jpubeco.2008.10.009})], where economic dynamics models of Solow-Cass-Koopmans type were developed which include more detailed demographic and employment factors. Unlike the predecessors, the model of the reviewed paper includes the interest rate and the aggregate consumption-capital ratio as endogenous variables. The modest complexity of the model permits an analytical investigation of a balanced growth path and obtaining qualitative consequences of changing longevity onto the consumption-capital ratio, the interest rate, and the optimal retirement age. The model has been calibrated on data of higher-developed countries (G7). Numerical implementations of different scenarios are presented and discussed.