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The B.E. Journal of Economic Analysis & Policy

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Volume 16, Issue 2 (Apr 2016)

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On the Demographics and the Severity of the Social Security Crisis

Emin Gahramanov
  • Corresponding author
  • Department of Economics, American University of Sharjah, University City, Sharjah, United Arab Emirates
  • Email:
Published Online: 2015-12-08 | DOI: https://doi.org/10.1515/bejeap-2015-0098

Abstract

Changing demographics across the world threatens the sustainability of pension benefits. Yet there is widespread sentiment among some business and policy analysts that in the presence of population ageing, more elderly people would mean more old-age consumption and robust business opportunities across all spending dimensions. In this paper we look at a micro-level analysis of intertemporal consumption/saving behavior, and find that in the presence of notable heterogeneity with respect to the consumer impatience and rationality degree, different demographic challenges and likely policy responses would imply greatly varying and significant consumption changes at old age. We also touch upon the associated issues of welfare analysis and transitional effects and discuss various complexities and challenges for policy implications and economic projections.

Keywords: pension crisis; perfect foresight; rule of thumb; baby boom; life expectancy

JEL: D91; E21; H55; D6

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About the article

Published Online: 2015-12-08

Published in Print: 2016-04-01



Citation Information: The B.E. Journal of Economic Analysis & Policy, ISSN (Online) 1935-1682, ISSN (Print) 2194-6108, DOI: https://doi.org/10.1515/bejeap-2015-0098. Export Citation

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