Skip Navigation



Oxford Economic Papers Advance Access published online on May 12, 2007
Oxford Economic Papers, doi:10.1093/oep/gpm009
This Article
Right arrow Full Text
Right arrow Full Text (PDF)
Right arrow All Versions of this Article:
60/1/88    most recent
gpm009v1
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by Heijdra, B. J.
Right arrow Articles by Romp, W. E.
Right arrow Search for Related Content
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

© Oxford University Press 2007 All rights reserved

A life-cycle overlapping-generations model of the small open economy

Ben J. Heijdra* and Ward E. Romp{dagger}

*University of Groningen, Faculty of Economics, P.O. Box 800, 9700 AV Groningen, The Netherlands; e-mail: b.j.heijdra{at}rug.nl
{dagger}University of Groningen, Faculty of Economics, e-mail: w.e.romp{at}rug.nl


  Abstract

We construct an overlapping generations model for the small open economy incorporating a realistic description of the mortality process. With age-dependent mortality, the typical life-cycle pattern of consumption and saving results from the maximizing behaviour of individual households. Our ‘Blanchard-Yaari-Modigliani’ model is used to analytically study a number of typical shocks affecting the small open economy, namely a balanced-budget public spending shock, a temporary Ricardian tax cut, and an interest rate shock. The demographic details matter a lot—both the impulse-response functions and the welfare profiles (associated with the different shocks) are critically affected by them. These demographic details furthermore do not wash out in the aggregate. The model is flexible and can be applied to a wide variety of theoretical and policy issues.

Key Words: JEL classifications: E10 • D91 • F41 • J11


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?




Disclaimer: Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.