In this paper we study the implications of population ageing in an economy with a sizeable non-traded goods sector. To this effect a highly stylized micro-founded macro model is constructed in which the age structure of the population plays a non-trivial role. The model distinguishes separate birth and death probabilities (thus allowing for net population change), allows for age-dependent labour productivity (thus mimicing life-cycle saving), and includes a rudimentary pension system (thus allowing for intergenerational redistribution). The model is used to analytically study demographic and pension shocks.

demographic shocks, fertility rate, non-traded goods, overlapping generations, pension reforms
Intertemporal Consumer Choice; Life Cycle Models and Saving (jel D91), Neoclassical (jel E13), Open Economy Macroeconomics (jel F41), Social Security and Public Pensions (jel H55)
Tinbergen Institute Discussion Paper Series
Tinbergen Institute

Bettendorf, L.J.H, & Heijdra, B.J. (2004). Population Ageing and Pension Reform in a Small Open Economy with Non-Traded Goods (No. TI 05-021/2). Tinbergen Institute Discussion Paper Series. Retrieved from