Ageing in the Netherlands : Analysing Policy Responses with an Age Model

Understanding the behaviour of economic agents is as important as understanding fiscal institutions. Our model integrates the generational-accounting approach with an applied-general equilibrium setup. The recognition of economic behaviour improves our assessment of the intergenerational consequences of government policies; accounting for fiscal institutions improves our projections of future economic developments. This paper illustrates the benefits from an integrated approach by presenting projections and policy simulations. Two analytical simulations demonstrate the working of the model. A third simulation shows the economic and intergenerational effects of a much discussed policy reform, i.e. a gradual increase of the official retirement age