Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/127331
Authors: 
Kuehnel, Johanna
Year of Publication: 
2011
Series/Report no.: 
Discussion Paper Series, University of Heidelberg, Department of Economics 510
Abstract: 
This paper introduces a democratic voting process into an OLG economy in order to analyze the e ffects of a rising old-age dependency ratio on the composition of government spending and endogenous economic growth. Forward-looking agents vote each period on the public policy mix between productive government expenditure and public consumption spending that benefi ts the elderly. Population aging shifts political power from the young to the old. While this does not aff ect public productive expenditure, it leads to an increase in public spending on the elderly and a slowdown in economic growth. However, the overall e ffect on long-term economic growth is positive. This is due to reduced capital dilution or increased saving.
Subjects: 
Demographics
Endogenous Economic Growth
Government Spending
Markov Perfect Equilibrium
Probabilistic Voting
JEL: 
D72
E62
O41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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