This paper discusses the consequences of population aging and a fundamental pension reform - that is, a shift towards more pre-funding - for capital markets in Germany. We use a stylized closed-economy, overlapping-generations model to compare the effects of the recent German pension reform with...

This study quantifies the potential effects of aging on asset prices using a sophisticated overlapping generations (OLG) model with international diversification reflecting the global nature of capital markets. We show that the expected decline in the returns to capital will depend on the degree...

We develop a simple overlapping generations model to analytically show that population aging leads to increased educational efforts through a general equilibrium effect. The key mechanism at work in the model is that scarcity of raw labor increases the rate of return to human capital relative to...