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Capital Accumulation and Population Growth in Two Sector Closed and Open Economies

  • Benjamin Bental
Conference paper
Part of the Studies in Contemporary Economics book series (CONTEMPORARY)

Abstract

An overlapping generations model with endogenous capital accumulation and population growth is explored. The rate of return on children is set exogenously, and dictates the required rate of return on capital. If that return is believed to be low, no capital is accumulated. In an international trade context it is shown that a fast population growth economy will have a high interest rate but may accumulate no capital. The policy conclusion is that high population growth countries may be justified in supporting capital accumulation in order to direct domestic investment away from children.

Keywords

Population Growth Rate Capital Accumulation High Interest Rate Perfect Foresight Overlap Generation Model 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

  1. Diamond, Peter: “National Debt in a Neoclassical Growth Model”., AER 55, No. 5, 1965.Google Scholar
  2. Eckstein, Zvi and Kenneth I. WOLPIN: “Endogenous Fertility and Optimal Population Size,” Journal of Public Economics, 27, No. 1, 1985.Google Scholar
  3. Kemp, Murray C.: The Pure Theory of International Trade and Investment, Prentice-Hall, Inc., 1969.Google Scholar
  4. Neher, Philip A.: “Peasants, Procreation and Pensions,” AER 61, No. 3, 1969.Google Scholar
  5. Nerlove, Marc, Assar RAZIN and Efraim SADKA: “Some Welfare Theoretic Implications of Endogenous Fertility,” IER 27, No. 1, 1986.Google Scholar
  6. WILLIs, Robert J.: “The Old Age Security Hypothesis and Population Growth” in Thomas K. BURCH (ed.): Demographic Behaviro — Inter-disciplinary Perspectives on Decision Making. Westview Press, 1980.Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1989

Authors and Affiliations

  • Benjamin Bental
    • 1
  1. 1.Faculty of Industrial Engineering and ManagementTechnion — Israel Institute of TechnologyHaifaIsrael

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