Macroeconomic and Policy Implications of Population Aging in Brazil

Jorgensen, Ole Hagen

Macroeconomic and Policy Implications of Population Aging in Brazil

Autores

Descripción

This paper analyzes the macroeconomic implications of population aging in Brazil. Three alternative yet complementary methodologies are adopted, and depending on policy responses to the fiscal implications of aging, there are two main findings: First, saving rates could increase and not necessarily fall as a consequence of aging in Brazil -- thus contradicting conventional views. Second, lifetime wealth across generations could increase -- as capital deepening generates a second demographic dividend. Two policy responses to aging are emphasized: First, a structural policy response of linking mandatory retirement (or entitlement) ages to increasing life expectancy would boost labor supply and reduce the fiscal costs of aging. Second, in terms of preferable parametric policy responses, the second demographic dividend will be promoted to the highest extent by keeping taxes and debt unchanged while allowing public pensions to adjust downward. Such a policy response would keep pensions from further crowding out private saving -- thus balancing capital accumulation with intergenerational income distribution. In conclusion, Brazil will not necessarily experience a fall in saving and growth, but if government policies are appropriately, adequately, and timely formulated, population aging is likely to lead to substantial capital deepening and increases in lifetime income, wealth, and welfare.

Palabras clave

ACCOUNTING, AGE MORTALITY, AGGREGATE DEBT, AGING COUNTRIES, ALTERNATIVE FINANCING, AMORTIZATION, BASE YEAR, BEQUEST, BEQUESTS, BORROWING, BUDGET CONSTRAINT, CAPITAL ACCOUNT, CAPITAL ACCUMULATION, CAPITAL FORMATION, CAPITAL INVESTMENTS, CAPITAL MARKET, CAPITAL SAVINGS, CAPITAL STOCK, CHILD MORTALITY, CHILD SURVIVAL, CLOSED ECONOMY, COMMODITY, COMPETITIVENESS, CREDIT FLOWS, CURRENT ACCOUNT, CURRENT ACCOUNT DEFICIT, DEBT, DEBT BURDEN, DEBT FINANCING, DEBT RATIO, DEBT SERVICE, DECLINE IN FERTILITY, DEMOGRAPHIC, DEMOGRAPHIC CHANGE, DEMOGRAPHIC CHANGES, DEMOGRAPHIC FACTORS, DEMOGRAPHIC TRANSITION, DEPENDENCY RATIO, DEPENDENCY RATIOS, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT POLICY, DISCOUNT RATE, DISTRIBUTION OF INCOME, DIVIDEND, DIVIDENDS, DOMESTIC BORROWING, DOMESTIC CREDIT, DOMESTIC DEBT, EARNINGS, ECONOMETRIC ANALYSIS, ECONOMIC AGENTS, ECONOMIC DEVELOPMENTS, ECONOMIC GROWTH, ECONOMIC IMPLICATIONS, ECONOMIC MODELS, ECONOMIC OUTCOMES, ECONOMIC POLICY, ECONOMIC PROJECTIONS, EDUCATION SYSTEMS, EFFECTS OF POPULATION, ELASTICITY, ELDERLY, ELDERLY PEOPLE, EMPLOYERS, EQUILIBRIUM, EXCLUSION, EXPENDITURE, EXPENDITURES, FACTORS OF PRODUCTION, FAMILIES, FERTILITY, FERTILITY RATES, FEWER PEOPLE, FINANCES, FINANCIAL BURDEN, FINANCIAL DEPTH, FINANCIAL MARKET, FINANCIAL MARKETS, FINANCIAL SECTOR, FISCAL BURDEN, FISCAL POLICY, FUTURE GENERATIONS, FUTURE RESEARCH, GDP, GDP PER CAPITA, GENERAL EQUILIBRIUM ANALYSIS, GOVERNMENT BONDS, GOVERNMENT BUDGET, GOVERNMENT DEBT, GOVERNMENT FINANCES, GOVERNMENT FINANCING, GOVERNMENT POLICIES, GOVERNMENT POLICY, GOVERNMENT PROGRAMS, GROWTH RATE, GROWTH THEORY, HEALTH CARE, HEALTH SYSTEM, HOUSEHOLD LEVEL, HOUSEHOLD SAVING, HOUSEHOLD SAVING RATE, HOUSEHOLD SAVING RATES, HOUSEHOLD SURVEYS, HOUSEHOLDS, HUMAN CAPITAL, IMMIGRATION, IMPROVEMENTS IN CHILD SURVIVAL, INCOME, INCOME GROUP, INCOME GROUPS, INCOME GROWTH, INCOME INEQUALITY, INCOME LEVELS, INCOMES, INDEXATION, INEQUALITY, INFLATION, INFLATION RATE, INFORMAL CREDIT, INTEREST PAYMENTS, INTEREST RATE, INTEREST RATES, INTERNATIONAL BANK, INVESTMENT RATE, LABOR FORCE, LABOR FORCE PARTICIPATION, LABOR SUPPLY, LIFE EXPECTANCY, LONGER LIFE, LOWER FERTILITY, M2, MACROECONOMIC VARIABLES, MARGINAL PRODUCTS, MARKET STRUCTURES, MIDDLE-INCOME COUNTRIES, MULTIPLIERS, NORMAL GOOD, NUMBER OF HOUSEHOLDS, NUMBER OF WORKERS, OLD AGE, OLD-AGE, OLDER AGE GROUPS, OPEN ECONOMY, OPTIMIZATION, OUTPUT, OUTPUT RATIO, PARTIAL EQUILIBRIUM ANALYSES, PARTIAL EQUILIBRIUM ANALYSIS, PENSION, PENSION ASSETS, PENSION CONTRIBUTION, PENSION CONTRIBUTIONS, PENSION REFORM, PENSION SYSTEM, PENSION SYSTEMS, PER CAPITA INCOME, PERFECT COMPETITION, PHYSICAL CAPITAL, POLICY DISCUSSIONS, POLICY IMPLICATIONS, POLICY MAKERS, POLICY RESEARCH, POLICY RESEARCH WORKING PAPER, POLICY RESPONSE, POLICY RESPONSES, POLITICAL ECONOMY, POLITICAL STABILITY, POPULATION AGE STRUCTURE, POPULATION CHANGES, POPULATION DIVISION, POPULATION DYNAMICS, POPULATION GROWTH, POPULATION GROWTH RATE, POPULATION PROJECTIONS, POPULATION STRUCTURE, POSITIVE EFFECTS, PRIVATE CREDIT, PRIVATE INVESTMENT, PRIVATE PENSION, PRIVATE PENSIONS, PRIVATE SAVING, PRIVATE SAVINGS, PRODUCTION FUNCTION, PRODUCTIVITY GROWTH, PROGRESS, PUBLIC DEBT, PUBLIC FINANCE, PUBLIC HEALTH, PUBLIC PENSION, PUBLIC PENSIONS, PUBLIC SAVING, PUBLIC SECTOR DEBT, RATE OF RETURN, REAL INTEREST, REAL INTEREST RATE, RECEIPTS, RELATIONSHIP BETWEEN POPULATION, REPLACEMENT RATE, REPLACEMENT RATES, RESPECT, RETIREMENT AGE, RETIREMENT AGES, RISK OF DEFAULT, RISK PREMIUM, SAVINGS, SAVINGS MECHANISM, SAVINGS MOTIVE, SAVINGS RATE, SAVINGS RATIO, SECURITY ARRANGEMENTS, SHARE OF CAPITAL, SOCIAL PROTECTION, SOCIAL SECURITY, STOCKS, SURVIVAL RATE, TAX, TAX RATE, TAX RATES, TRANSITION COUNTRIES, TRANSITION ECONOMIES, TRANSPARENCY, URBANIZATION, WAGE RATES, WAGES, WEALTH