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    National Institute on Aging macroeconomic-demographic model

    United States. National Institutes of Health [NIH]

    Bethesda, Md, United States. National Institutes of Health [NIH], 1984. x, 146 p.

    This monograph describes the initial version of the longterm macroeconomic demographic model of the US economy which was developed for the National Institute of Aging (NIA) to investigate the effects of demographic aging on the income level of the elderly as well as on productivity, consumption, savings, and investment. Important features of the model design included the use of large amounts of demographic information, explicit representation of the process of economic growth, the use of a general equilibrium framework, representation of the structural features of the major pension systems, and a comprehensive, integrated approach. The macroeconomic demographic model is composed of a core macroeconomic and demographic modelling system and 5 peripheral models that depict the operation and behavior of the major components of the retirement income system. The core model has 3 major parts: a population projection system, a macroeconmic growth model, and a labor market model. The population model replicates US Census Bureau population projection methodology to project total US population by age and sex for each year from 1970 through 2055. The longterm econometric forecasting model which depicts formulation of working, spending, and savings plans by households and production, investment, and employment plans by businesses, as well as projecting demand for and supply of goods and services. The labor market model depicts the demand for labor, the supply of labor measured in total annual manhours worked for each of 22 age-sex groups, and the simultaneous determination of labor and capital services input along with compensation, output, and employment. The 5 major elements of the retirement income system that are modelled are the Social Security system, the private pension system, the public employee retirement system, the Supplemental Security Income system, and the Medicare system. At the start of each simulation year, the population model forecasts the new size and composition of the population. The macroeconomic growth model and labor market model use the figures to project levels of aggregate economic activity and labor market outputs for the 22 different age-sex cohorts. These projections are inputs into the simulation of each of the 3 pension system models and 2 transfer income models. 1 chapter of the report describes in nontechnical terms each of the 3 core and 5 peripheral models while the final chapter presents the base case simulation and validation of the model from 1970 to 1979. A series of appendices present the equations of each of the 5 principal models and also discuss new analyses completed in the course of model development.
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