TY - JOUR
T1 - A dynamic new Keynesian life-cycle model
T2 - Societal aging, demographics, and monetary policy
AU - Fujiwara, Ippei
AU - Teranishi, Yuki
PY - 2008/8
Y1 - 2008/8
N2 - In this paper, we first construct a dynamic new Keynesian model that incorporates life-cycle behavior a la Gertler [1999. Government debt and social security in a life-cycle economy. Carnegie-Rochester Conference Series on Public Policy 50, 61-110], in order to study whether structural shocks to the economy have asymmetric effects on heterogeneous agents, namely workers and retirees. We also examine whether considerations of life-cycle and demographic structure alter the dynamic properties of the monetary business cycle model, specifically the degree of amplification in impulse responses. According to our simulation results, shocks indeed have asymmetric impacts on different households and the demographic structure does alter the size of responses against shocks by changing the trade-off between substitution and income effects.
AB - In this paper, we first construct a dynamic new Keynesian model that incorporates life-cycle behavior a la Gertler [1999. Government debt and social security in a life-cycle economy. Carnegie-Rochester Conference Series on Public Policy 50, 61-110], in order to study whether structural shocks to the economy have asymmetric effects on heterogeneous agents, namely workers and retirees. We also examine whether considerations of life-cycle and demographic structure alter the dynamic properties of the monetary business cycle model, specifically the degree of amplification in impulse responses. According to our simulation results, shocks indeed have asymmetric impacts on different households and the demographic structure does alter the size of responses against shocks by changing the trade-off between substitution and income effects.
KW - Heterogenous agents
KW - Life-cycle
KW - New Keynesian model
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U2 - 10.1016/j.jedc.2007.09.002
DO - 10.1016/j.jedc.2007.09.002
M3 - Article
AN - SCOPUS:48949120105
VL - 32
SP - 2398
EP - 2427
JO - Journal of Economic Dynamics and Control
JF - Journal of Economic Dynamics and Control
SN - 0165-1889
IS - 8
ER -