Aging, Pensions, and Growth

Abstract

This study presents an endogenous-growth overlapping-generations model featuring probabilistic voting over public pensions. The analysis shows that (i) the pension---GDP ratio increases as life expectancy increases in the presence of an annuity market, while it may show a hump-shaped pattern in its absence; (ii) the growth rate is higher in the presence of an annuity market than in its absence, but its presence implies an intergenerational trade-off in terms of utility.