سیاست های مالی درون زا و انتقال بازار سرمایه در کنار شوک های جمعیتی

Previous analyses of population aging mainly focused on the social security implications of the aging trend. This paper addresses aging in an open economy framework with two regions that have politically responsive fiscal policy regarding education finance. Demographic shocks start an economic growth process but results are sensitive to a critical parameter in the model that indicates return to education spending. Low values of this parameter are associated with less favorable economic outcomes. Hence, a policy implication emerges that enhancing the education system might pay off in terms of easing the negative growth and welfare consequences of expected demographic shocks.

The global economy is experiencing major changes as a consequence of the aging of developed nations’ populations. According to the 2006 Revision of the World Population Prospects published by the United Nations Population Division, the percent share of population 65 and older in developed countries is expected to rise from 15.3% in 2005 to 26.1% in 2050.1 An important and widely ignored characteristic of the recent aging trend is that it influences fiscal policy decision making concurrently with rapid global capital market integration. In a world connected by an international capital market, population aging in one region of the world leads to capital flows by altering saving and consumption behavior and, by extension, changes fiscal policy. An endogenously changing fiscal policy, in turn, affects human capital accumulation by changing government spending for public goods such as education that serve as inputs to human capital. Through these channels, population aging may have unexpected strong growth and welfare implications. Recent discussions of aging have noted the potential generational conflict generated by the need to share society's resources between non-working elderly and the younger working population. While the literature focused on social security as the sole source of conflict between generations, an increasing number of studies, particularly from the U.S., also drew attention to public education as another key government spending program that may bring the young and the elderly into conflict amid an aging population.2 In the U.S., education is the largest public expenditure in the state and local government budgets. Table 1 shows the size of education expenditures in the U.S. and other OECD countries. Total public education expenditure gets as high as 5.5% of GDP (Iceland) and 16.2% of total public expenditure (Mexico) with OECD averages at 4% and 9%, respectively. OECD average for annual educational expenditures per student relative to GDP per capita is also about 23%, which shows the significance of these expenditures in the economies of developed countries. Empirical studies argued and presented evidence that the elderly has a strong dislike for education spending. In one of the pioneering studies, Button (1992) examined the voting behavior in tax referenda in six Florida counties and suggested that generational conflict between young and elderly voters is quite apparent on education issues. In a broader empirical framework, Poterba (1997) started an interesting literature on aging and education spending by providing empirical evidence from the U.S. using state-level data that older citizens prefer lower levels of public spending for education. Ladd and Murray (2001) did not find a strong evidence of generational conflict in a similar study that used county-level data. Another study by Harris et al. (2001) confirmed Poterba's finding using school-district-level data, however with a smaller estimated impact than Poterba's estimates. Finally, in a recent study from outside the U.S., Grob and Wolter (2005) showed using panel data on Swiss Cantons that elderly population has indeed had a negative effect on public education spending during the period from 1990 to 2002. A branch of the literature on aging and economic growth used this evidence on the relationship between increasing political power of the elderly and government spending on education to examine economic growth effects. Recent examples to such studies are Holtz-Eakin et al. (2004), Razin and Sadka (2004), Gradstein and Kaganovich (2004) and Razin et al. (2002). While these studies found strong fiscal policy and/or growth effects of aging through its impact on education spending and human capital, they did not consider how this impact could be transmitted to other regions of the world. Hence they lack an open economy perspective. On the other hand, other recent studies examined open economy aspects of population growth differences between regions without a political economy perspective (see Sayan, 2005; Jelassi and Sayan (2005); Kenc and Sayan, 2001; Deardorff, 1994). Kaganovich and Zilcha (1999) and Boldrin and Montes (2005) examined intergenerational transfers by comparing the effects of both public education and social security on economic growth. Kaganovich and Zilcha (1999) addressed the optimal allocation of tax revenues between education and social security and found, under certain conditions, that more resources should be diverted to education. While these papers provide important insights into the combined effects of education and social security on growth, they take more of a normative approach and do not address how public funds for these programs may endogenously change with aging. Table 1. Education expenditures in OECD countries Countries Annual expenditure on educational institutions per student (2002)a Annual expenditure on educational institutions per student relative to GDP per capita (2002) Total public expenditure on education as a percentage of total public expenditure (2002) Total public expenditure on education as a percentage of GDP (2002) Australia 19,665 23.65 10.6 3.7 Austria 28,373 31.42 7.6 3.8 Belgium 13,936 24.34 8.3 4.2 Canada m m m m Czech Republic 7328 14.73 6.5 3.0 Denmark 15,730 26.18 8.7 4.8 Finland 12,208 21.95 7.9 4.0 France 20,402 24.76 7.7 4.1 Germany 21,458 26.84 6.4 3.1 Greece 10,819 18.91 5.3 2.5 Hungary 11,583 26.88 6.2 3.3 Iceland 14,400 25.34 12.0 5.5 Ireland 15,883 16.27 9.2 3.1 Italy 14,799 28.08 7.2 3.5 Japan 13,069 24.02 8.0 2.7 Korea, Rep 9435 25.58 13.2 3.3 Luxembourg 25,807 24.74 9.2 4.0 Mexico 3235 17.26 16.2 3.6 Netherlands 18,253 20.32 7.2 3.4 New Zealand 10,234 22.96 14.7 4.7 Norway 5481 24.07 9.4 4.5 Poland 5481 24.48 m 4.1 Portugal 11,861 31.51 9.2 4.3 Slovak Rep 3665 14.57 5.5 2.9 Spain 10,601 22.85 7.5 3.0 Sweden 18,495 21.90 8.5 5.0 Switzerland 28,268 28.96 9.1 4.1 Turkey m m m 2.4 United Kingdom 11,655 20.16 9.0 3.7 United States 17,147 23.68 10.3 3.8 OECD average 14,260 23.44 8.91 3.72 Source: OECD Education at a Glance, 2005. a In equivalent U.S. dollars converted using PPPs for GDP, based on full time equivalents Table options This paper examines how the differential aging trend could affect aggregate quantities such as capital, output, capital flows and welfare when individuals can influence the efficiency of labor supply by voting on a tax that is earmarked for government education expenditures. The open economy framework enables an examination of the interactions between the domestic (political) and global effects of demographic changes. The paper compares demographic changes in economically similar regions to highlight the significance of differential aging trend in regions like the United States, Europe and Japan. The workings of the model is analyzed in a numerical exercise, which points to three key conclusions: returns to education is a critical component of how demographic changes affect aggregate outcomes; based on plausible estimate of the return to education there might be substantial welfare reductions; there is a need to improve the education system to counteract the negative economic effects of population aging. The next section describes in detail the model used in this paper. Section 3 presents an analytical examination of dynamic capital stock transitions between pre- and post-aging steady states. Section 4 describes the transition analysis that requires numerical simulations and presents simulation results. The last section presents the concluding remarks.

Population aging affects education spending policy by changing the political balance in favor of the preferences of older generations. This triggers changes in the economy of both the aging region and other regions through the medium of internationally mobile capital. The numerical simulation exercises show that capital flows from the aging region to the late-aging region. The paper distinguishes between the direct effects of having lower growth in workers in the economy and indirect effects arising from fiscal policy dynamics caused by a changing identity of the median voter. The paper shows the significance of combining open economy with endogenous fiscal policy in the same model by comparing this to closed economy and exogenous fiscal policy models. While an effect that is unique to the combined model is identified, it is not possible to determine the direction and exact magnitude of this effect. A numerical simulation exercise shows that despite the negative effects of the demographic shocks on education spending and human capital per worker, these shocks might still trigger a growth process that lead to consumption and welfare improvements. One robust result is that late-aging region experiences a more favorable transition following its own demographic shock compared to region A's transition following its demographic shock two periods earlier. Separate simulations also reveal that these results are sensitive to a critical parameter in the model that indicates the return to education spending. Indeed, the low values of this parameter are associated with less favorable economic outcomes particularly in education spending and human capital. Hence, a policy implication emerges that investing in education system enhancement might pay off in terms of easing the negative growth and welfare consequences of expected demographic shocks.