IMF Working Papers

Life-Cycles, Dynasties, Savings: Implications for Closed and Small, Open Economies

By Hamid Faruqee, Douglas Laxton

July 1, 2000

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Hamid Faruqee, and Douglas Laxton. Life-Cycles, Dynasties, Savings: Implications for Closed and Small, Open Economies, (USA: International Monetary Fund, 2000) accessed December 3, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the macroeconomic implications of life-cycle and dynastic saving behavior for closed and small, open economies. Using an extended version of Blanchard’s overlapping agents model, the analytical framework nests these two competing views, treating agents as either dynastic households or disconnected generations. Calibrating the life-cycle variant using empirical age-earnings profiles, the analysis compares the long-run effects of fiscal policy shocks under both perspectives. The results quantify the implications of life-cycle considerations for the effects of deficit finance on real interest rates and the capital stock or net foreign assets.

Subject: Consumption, Financial services, Income, Labor, National accounts, Public debt, Real interest rates

Keywords: Age-earnings profile, Asset income, Asset income of the household, Closed economy variant, Consumption, Debt build-up, Earnings profile, Global, Government Debt, Gross investment, Income, Income profile, Interest income, Labor income, Life-cycle income, Open economy, Profile choose, Real interest rate, Real interest rates, Ricardian Equivalence, Saving, WP

Publication Details

  • Pages:

    40

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2000/126

  • Stock No:

    WPIEA1262000

  • ISBN:

    9781451854893

  • ISSN:

    1018-5941

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