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Population aging, fiscal policies, and national saving : Prediction for Korean economy

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  • Population aging, fiscal policies, and national saving
  • Chun, Young Jun
  • KDI; National Bureau of Economic Research


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Title Population aging, fiscal policies, and national saving
Similar Titles
Sub Title

Prediction for Korean economy

Material Type Reports
Author(English)

Chun, Young Jun

Publisher

[Seoul]; [Massachusetts]:KDI; National Bureau of Economic Research

Date 2006-05
Series Title; No Working Paper / 12265
Pages 37
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < General
Economy < Economic Administration
Social Development < Population
Holding KDI

Abstract

This paper evaluates the effects of population aging and fiscal policies on national saving in Korean situation. For the prediction of the national savings rate of Korea for the enxt several decades, we employ a life-cycle model, which incorporates the generational accounting approach needed to assess the distribution of fiscal burden across generations. We found that the rapid population aging and long-term budgetary imbalance will substantially lower the national savings rate in Korea. A sensitivity analysis based on an alternative model, an altruistic family model, shows that these predictions are robust to the specification of altruism among generations. In addition, the estimation results of consumption fuctions with respect to various kinds of wealth suggest that the annuitization of wealth due to maturing of public pensions and introduction of reverse annuity mortgage is likely to further decrease the savings rate in the future.