Simulation models

Motivation

This workshop is intended for people interested in using NTA with recursive micro/macroeconomic theory. These models are currently the workhorse for studying a wide variety of economic problems such as monetary and fiscal policies, economic growth, and optimal age of retirement, among many others. The economic data contained in NTA is not only suitable for these economic models, but it is also the most coherence international dataset currently available by age. Thus, in order to take advantage of the rich information, the aim of the workshop is to propose topics and study advance readings to launch new research lines that will require simulation modeling; e.g. testing economic hypothesis, forecasting economic consequences of population aging, etc.

Working Group Coordinator: Miguel Sanchez-Romero

Topics and Organization

The economic literature is currently paying a great deal of attention to the importance that longer life expectancies and the decrease in fertility have on the sustainability of the pension system. Retirement and investment in human capital are two key factors to look at if one wants to guarantee the sustainability of the system. In the same direction, the majority of NTA members have suggested these two topics, with an overwhelming agreement with respect to retirement. Other two important topics have also been suggested: migration and bequests. However, they have been dropped because the economic literature on migration (using OLG models) is very limited, and because there is already a specific working group in bequests (Convener: Luis Rosero Bixby).

Goals (either as a country team or for cross-country comparisons):

1. Suggest research lines either in retirement, or human capital investment, or both (availability of data, test different theories, etc…).
2. Modeling strategy to tackle each research line
3. Identify problems modeling retirement and human capital investment; for example, what will labor income profiles be in the future? How to model the return in human capital investment?

Necessary data, besides NTA, to obtain first results while in Hawaii:

• Demographic data: population, age-specific fertility rates, and age-specific mortality rates.
• Time series of National Accounts (check OCDE, World Bank, IMF, National Statistical Institutes, etc…)
• Historical labor income profiles (labor force participation rates by age)
• Retirement system established in each country and its features
• What is the investment in education per child relative to parents’ income?
• Others…

Reading list

Readings