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N° 2008-22 |
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| October 2008 |
Demographic Uncertainty in Europe
Implications on Macro Economic Trends and Pension Reforms
An Investigation with the INGENUE2 Model |
Michel Aglietta
Vladimir Borgy |
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Ageing is a main concern in Western Europe for the present half century. It impinges
heavily upon the financing of retirement because a shrinking labour force will entail
decelerating growth. Moreover, contrary to popular opinion and to most prospective studies
which rely on deterministic demographic projections, the determinants of population size
and structure are stochastic. The present paper makes use of the INGENUE2 model to
assess the economic impact of demographic uncertainty in Western Europe.
Demographic uncertainty affects saving, financial conditions and growth significantly from
year 2025 onwards. Worst case scenarios can have crippling effects on the financing of
public pension under present retirement policies. It makes all the more necessary to study
alternatives. We simulate a policy that involves the development of a funding system to
substitute to part of the projected increase in the contribution rate, both under deterministic
and stochastic demographic forecasts |
Non-technical summary |
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Résumé
non-technique
en français |
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| Full text |
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| Computable General Equilibrium Models; international capital flows;
life cycle models and saving; demographic trends and forecasts |
Keywords |
| C68; F21; D91; J11 |
JEL classification |
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