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The Impact of Retirement Pension on the Economic Growth in Iran: An Analysis with an Overlapping Generations Model
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Mohadeseh Saberi1   , Zahra Afshari *2 , Ahmad Sarlak3 , Fakhroddin Fakhrhosseini4 , Esmaeil Safarzadeh5 |
1- Department of Economics, Arak Branch, Islamic Azad University, Arak, Iran
2- Professor of Economics, Department of Economics, The Faculty of Social Sciences and Economics, Alzahra University,Tehran, Iran.
3- Islamic Azad University of Arak
4- Islamic Azad University of Tonekabon
5- Department of Economics, The Faculty of Social Sciences and Economics, Alzahra University,Tehran, Iran. |
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Abstract: (131 Views) |
| In this article, population aging in a closed economy with a computable generalized Diamond overlapping generations (OLG) model has been investigated in which the element of human capital has been endogenously formed. In this study, the effect of population aging in a closed economy with 8 overlapping generations based on the Diamond model, capable of simulating the intergenerational differences has been designed for the Iranian economy across 50 years from 1400 to 1450. The research model includes 3 economic agents of household, firm, and government, whose behavior and decision-making are interdependent. First, the impact of aging on the dynamics of the macroeconomic variables, in the scenario of the current situation of Iran's pensions and benefits has been simulated, and then, the impact of implementing policies to increase pensions and benefits under different scenarios on economic growth has been simulated. The results show that because increasing pensions is a cost to the government on the one hand and increases government spending and the government budget deficit, on the other hand, consumption and savings increase as the income of the elderly increases. Increasing retirement savings leads to larger capital markets and lower interest rates, resulting in increased investment. In addition, this policy indirectly has a double effect on growth through the effect of redistribution and improved income distribution. Hence, policy to increase pensions encourages demand-side economic growth. If this policy is based on the growth of human capital, it can neutralize the adverse effects of aging on economic growth. |
Article number: 4 |
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Full-Text [PDF 1221 kb]
(91 Downloads)
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Type of Study: Empirical Study |
Subject:
Macroeconomics: Consumption, Saving, Production, Employment, and Investment (E2)
Received: 2023/12/15 | Accepted: 2024/08/3 | Published: 2024/09/11
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