“Does Demographic Change Matter for Growth?” by Pei-Ju Liao
Academia Sinica, Taiwan
How important is the demographic transition for economic growth? To answer this question, this paper constructs a general equilibrium overlapping generations model with endogenous fertility. Our results suggest that demographic transition contributed to more than one third of the output growth in Taiwan in the past four decades, while TFP growth explains another one third and the remaining is mainly due to skill-biased technological progress. As a complement to the literature, this paper shows that the role of demographic transition is important in the growth process.