Tag Archives: Retirement

Real Estate as Retirement Asset?

How many years of care in a nursing home does a typical single family house buy? In Der Spiegel, Christina Elmer, Patrick Stotz und Achim Tack have done the math for Germany. Accounting for price variation in care and real estate yields large regional differences: 3 years in poor regions in Eastern Germany versus 40 years in downtown Munich (see the map in the article).


“Ageing, Government Budgets, Retirement and Growth,” EER, 2012

European Economic Review 56(1), January 2012, with Martín Gonzalez-Eiras. PDF.

We analyze the short and long run effects of demographic ageing—increased longevity and reduced fertility—on per-capita growth. The OLG model captures direct effects, working through adjustments in the savings rate, labor supply, and capital deepening, and indirect effects, working through changes of taxes, government spending components and the retirement age in politico-economic equilibrium. Growth is driven by capital accumulation and productivity increases fueled by public investment. The closed-form solutions of the model predict taxation and the retirement age in OECD economies to increase in response to demographic ageing and per-capita growth to accelerate. If the retirement age were held constant, the growth rate in politico-economic equilibrium would essentially remain unchanged, due to a surge of social security transfers and crowding out of public investment.

(Unfortunately, the acknowledgements got lost in the publishing process.) For comments, we thank Casper van Ewijk, Enrique Kawamura, George McCandless, Alex Monge, Vincenzo Quadrini, Jaume Ventura, Fabrizio Zilibotti as well as conference and seminar participants at Banco Central de la Republica Argentina, CREI (Universidad Pompeu Fabra), EEA annual meeting, EPRU (University of Copenhagen), ESSIM, IIES (Stockholm University), Netspar, Penn State, SED annual meeting, Study Center Gerzensee, and Universidad de San Andres. Andreas Walchli provided valuable research assistance.

“Bedroht der demografische Wandel die Produktivität? (Does Population Ageing Lower Productivity Growth?),” NZZ, 2011

Neue Zürcher Zeitung, November 16, 2011. PDF. Ökonomenstimme, November 16, 2011. HTML.

  • The economics is not as worrying as many believe.
  • But the politics is.