Population Ageing In New Zealand: Implications for Living Standards and the Optimal Rate of Saving

Ross Guest (), John Bryant () and Grant Scobie

No 03/10, Treasury Working Paper Series from New Zealand Treasury

Abstract: Over the next 50 years, New Zealand’s population will age substantially. There has been wide debate about whether New Zealand should prepare for population ageing by increasing national savings. The debate had not, however, involved explicit consideration of possible time paths for savings, consumption, debt, and other relevant macroeconomic variables; nor have explicit principles been offered for determining which of these time paths are to be preferred. This paper addresses the question of choosing time paths through the use of a Ramsey-Solow model of optimal saving, adapted for investigating problems of population ageing. The results suggest that population ageing alone would not justify increases in national savings rates beyond those envisaged by current policy. The cost of ageing in terms of reduced real consumption is not large enough to justify large additional savings beyond those currently predicted, and the concomitant reduction in current consumption. The findings concerning national savings and living standards are robust to a variety of specifications of demographic conditions, interest rates, and productivity growth.

Keywords: consumption; saving; inter-temporal paths; Ramsey model; population ageing; New Zealand (search for similar items in EconPapers)
JEL-codes: D9 E21 J11 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2003-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://treasury.govt.nz/sites/default/files/2007-09/twp03-10.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nzt:nztwps:03/10

Access Statistics for this paper

More papers in Treasury Working Paper Series from New Zealand Treasury New Zealand Treasury, PO Box 3724, Wellington 6140, New Zealand. Contact information at EDIRC.
Bibliographic data for series maintained by CSS I&T Web & Publishing, The Treasury ().