{
  "title": "Life-Cycles, Dynasties, Savings: Implications for Closed and Small, Open Economies",
  "publication": "IMF Working Papers, July 1, 2000",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/life-cycles-dynasties-savings-implications-for-closed-and-small-open-economies-3683",
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  "summary": "This paper examines the macroeconomic implications of life-cycle and dynastic saving behavior for closed and small, open economies.",
  "sections": [
    {
      "heading": "Summary and scope",
      "content": "- Examines the macroeconomic implications of life-cycle and dynastic saving behavior for closed and small, open economies.\n- Compares two competing views of household behavior: dynastic households versus disconnected generations (life-cycle).\n- Quantifies implications of life-cycle considerations for the effects of deficit finance on real interest rates and the capital stock or net foreign assets."
    },
    {
      "heading": "Methodology",
      "content": "- Uses an extended version of Blanchard’s overlapping agents model that nests both the dynastic and life-cycle perspectives.\n- Calibrates the life-cycle variant using empirical age-earnings profiles.\n- Compares long-run effects of fiscal policy shocks under both perspectives."
    },
    {
      "heading": "Comparative findings",
      "content": "- The analytical framework treats agents as either dynastic households or disconnected generations, allowing direct comparison of the two approaches.\n- Calibration with empirical age-earnings profiles enables quantification of how life-cycle saving alters responses to deficit finance relative to the dynastic case.\n- Results focus on the differential impacts on real interest rates and on the capital stock or net foreign assets across closed and small, open economy variants."
    },
    {
      "heading": "Implications for fiscal policy",
      "content": "- Provides quantified evidence on how life-cycle behavior affects the macroeconomic consequences of deficit finance.\n- Highlights that life-cycle considerations materially influence the effects of fiscal policy shocks on:\n  - real interest rates\n  - the capital stock (closed economy)\n  - net foreign assets (small, open economy)"
    },
    {
      "heading": "Subjects and keywords (as stated in the source)",
      "content": "- Subject: Consumption, Financial services, Income, Labor, National accounts, Public debt, Real interest rates\n- Keywords: age-earnings profile, asset income, asset income of the household, closed economy variant, Consumption, debt build-up, earnings profile, Global, Government Debt, gross investment, Income, income profile, interest income, labor income, life-cycle income, open economy, profile choose, real interest rate, Real interest rates, Ricardian Equivalence, Saving, WP\n\nHamid Faruqee and Douglas Laxton, July 1, 2000. IMF Working Paper No. 2000/126. DOI: https://doi.org/10.5089/9781451854893.001\n\n---\n\n Content in this bundle\n\n- Life-Cycles, Dynasties, Saving: Implications for Closed and Small, Open Economies - WP/00/126\n  - Life-Cycles, Dynasties, Saving: Implications for Closed and Small, Open Economies - WP/00/126 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Life-Cycles, Dynasties, Saving: Implications for Closed and Small, Open Economies - WP/00/126 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/life-cycles-dynasties-savings-implications-for-closed-and-small-open-economies-3683"
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    "Authors: Hamid Faruqee, Douglas Laxton",
    "Published: July 1, 2000",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451854893.001",
    "Examines the macroeconomic implications of life-cycle and dynastic saving behavior for closed and small, open economies.",
    "Compares two competing views of household behavior: dynastic households versus disconnected generations (life-cycle).",
    "Quantifies implications of life-cycle considerations for the effects of deficit finance on real interest rates and the capital stock or net foreign assets.",
    "Uses an extended version of Blanchard’s overlapping agents model that nests both the dynastic and life-cycle perspectives.",
    "Calibrates the life-cycle variant using empirical age-earnings profiles.",
    "Compares long-run effects of fiscal policy shocks under both perspectives.",
    "The analytical framework treats agents as either dynastic households or disconnected generations, allowing direct comparison of the two approaches.",
    "Calibration with empirical age-earnings profiles enables quantification of how life-cycle saving alters responses to deficit finance relative to the dynastic case.",
    "Results focus on the differential impacts on real interest rates and on the capital stock or net foreign assets across closed and small, open economy variants.",
    "Provides quantified evidence on how life-cycle behavior affects the macroeconomic consequences of deficit finance.",
    "Highlights that life-cycle considerations materially influence the effects of fiscal policy shocks on:",
    "Subject: Consumption, Financial services, Income, Labor, National accounts, Public debt, Real interest rates",
    "Keywords: age-earnings profile, asset income, asset income of the household, closed economy variant, Consumption, debt build-up, earnings profile, Global, Government Debt, gross investment, Income, income profile, interest income, labor income, life-cycle income, open economy, profile choose, real interest rate, Real interest rates, Ricardian Equivalence, Saving, WP",
    "**Life-Cycles, Dynasties, Saving: Implications for Closed and Small, Open Economies - WP/00/126**"
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