On the effects of public and private transfers on capital accumulation: some lessons from the NTA aggregates
Journal of Population Economics, 26:4, 1409–1430 (2013)
Intergenerational transfers are a very important part of our daily
economic activity. These transfers, whether familial or public, may influence our economic decisions to the same extent that financial markets do. In this paper, we seek to shed some light on the effects of transfers on capital accumulation in the face of demographic aging. In particular, a general equilibrium overlapping generations model with realistic public and familial transfers drawn from the National Transfer Accounts project is implemented to Spain. Given that, in this case, net familial transfers mainly go from parents to children while public transfers go from children to parents, it is shown that the Spanish baby boom and baby bust could lead to capital depletion and a reduction in consumption per capita.
Keywords: Spain, capital-labor ratio, demographic ageing, economic models