Endogenous fiscal policy and capital market transmissions in the presence of demographic shocks

Aging, transitional dynamics, and gains from trade

“…Although there are a number of multi-country overlapping generations models which investigate the relationship between demographic structure and the pattern of international borrowing and lending (e.g., Kenc and Sayan, 2001;Brooks, 2003;Momota and Futagami, 2005;Domeij and Flodé n, 2006;Bajona and Kehoe, 2006;Aglietta et al, 2007;Fehr et al, 2008;Tosun, 2008), little attention has been paid to the link between demographic difference and the pattern of international trade. 3 Notable exceptions are Sayan (2004, 2005) and Sayan (2005), who show that aging (i.e., an exogenous fall in the rate of population growth) makes the country relatively more capital-abundant (i.e., labor-scarce), thereby lowering the autarky steady state relative price of the capital-intensive good.…”

Public education and social security: a political economy approach

“…Thus far, we have focused on the Markov-perfect political equilibrium of a voting game over two policy issues, public education for the young and social security for the old. In order to examine the role of this equilibrium concept, this section introduces an alternative political equilibrium concept adopted by many studies: myopic voting, where voters today take future policy as given (e.g., Gradstein and Kaganovich, 2004; Holz-Eakin, Lovely, and Tosun, 2004;Boldrin, 2005;Tosun, 2008;Kaganovich and Meier, 2012). Under this alternative voting that does not include the forward-looking behavior of agents, we find that the model demonstrates only one type of equilibrium with z > 0 and e = 0.…”

“…This study employs a Markov-perfect equilibrium to demonstrate the forward-looking behavior of voters. In order to examine the role of this equilibrium concept, we investigate an alternative concept of equilibrium, that is, myopic voting, which is often employed in the literature (see, e.g., Holtz-Eakin, Lovely, and Tosun, 2004;Tosun, 2008;Gradstein and Kaganovich, 2004;Boldrin, 2005). In this voting scheme, voters take future policy as given.…”

The Effect of Demographic Change on Financial Stability

“…In this case, many governments have been observed to provide tax incentives and subsidies to raise the conversion of longterm savings into annuities at retirement age (Chikada et al, 2012;Fanti & Spataro, 2013;Bielecki et al, 2015). This limits the ability of fiscal policy of the government, owing to the demand for increased health care expenditure and welfare for the old-age population during their retirement age (Faruqee & Muhleisen, 2003;Tosun, 2008). Bloom, Canning, and Fink (2007) examined the capacity of Sub-Saharan African nations to reach their planned demographic dividend if the policy and institutional context are well-suited.…”