Will China eat our lunch or take us out to dinner?
Subtitle: simulating the transition paths of the U.S., EU, Japan, and China
By: Hans Fehr, Sabine Jokisch, Laurence J. Kotlikoff.
Contributors: Jokisch, Sabine.; Kotlikoff, Laurence J.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11668; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11668.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Saving and investment -- China; China -- Economic conditions -- 2000-; United States -- Economic conditions -- 2001-; Europe -- Economic conditions -- 1945-; Japan -- Economic conditions -- 1989-
Description: "This paper develops a dynamic, life-cycle, general equilibrium model to study the interdependent demographic, fiscal, and economic transition paths of China, Japan, the U.S., and the EU.  Each of these countries/regions is entering a period of rapid and significant aging requiring major fiscal adjustments. In previous studies that excluded China we predicted that tax hikes needed to pay benefits along the developed world's demographic transition would lead to capital shortage, reducing real wages per unit of human capital.  Adding China to the model dramatically alters this prediction.  Even though China is aging rapidly, its saving behavior, growth rate, and fiscal policies are very different from those of developed countries.  If this continues to be the case, the model's long run looks much brighter. China eventually becomes the world's saver and, thereby, the developed world's savoir with respect to its long-run supply of capital and long-run general equilibrium prospects.  And, rather than seeing the real wage per unit of human capital fall, the West and Japan see it rise by one fifth by 2030 and by three fifths by 2100.  These wage increases are over and above those associated with technical progress"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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