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ABSTRACT:
This article studies how demography affects the outcome of the environmental policy in a macro-economic perspective, incorporating age-earning profiles in an OLG model à la Blanchard (1985) to capture the age structure effect of the demographic shocks. It first demonstrates, conversely to previous works of the related literature that a decrease in the birth rate may lower the steady-state per capita stock of physical capital even if the aggregate labor supply is exogenous. It also demonstrates that the ageing of population influences the macro-economic impact of the environmental policy according to the cause of the ageing and the life-cycle earnings assumption. Thus, with decreasing age-earning profiles, a lower birth rate reduces the detrimental impact of the environmental policy on the steady-state per capita stock of physical capital for low values of this birth rate, while a reduction of the mortality rate reinforces the negative outcome of the environmental policy. When earnings profiles are independent

SUGGESTED CITATION:
Xavier Pautrel, "Macroeconomic Implications of Demography for the Environment: A Life-Cycle Perspective" (February 19, 2009). Fondazione Eni Enrico Mattei Working Papers. Working Paper 265.
http://www.bepress.com/feem/paper265