Cruz A. Echevarría

Life expectancy, retirement and endogenous growth

Abstract In this paper I address the links between life expectancy, retirement age and economic growth. I build a finite horizon OLG model with exogenous retirement in which human capital accumulation drives endogenous growth. The return on individual investment in human capital depends positively on the remaining active years. Postponing retirement age raises the return and investment in human capital, and the proportion of working individuals, thus increasing the sustainable growth rate. Increments in life expectancy do not increase the growth rate by themselves, but reduce it: optimal investment in human capital is not affected and the proportion of retirees becomes larger. Therefore, increases in life expectancy lead to higher growth rates only if they are accompanied by simultaneous increments in the working period.

On age distribution of population, government expenditure and fiscal federalism

In this paper I build a simple model to analyze the consequences that population growth imposes on the relative needs of expenditure of governments in a fiscal federalism setup. I assume, first, that some government expenditure items can be classified according to the age of their recipient individuals and, second, that different levels of government are usually assigned different expenditure programs. The implication is that, for an initially given level of effective public good provision, changes in the size of population as well as in its age structure will influence the composition of public expenditure for different layers of administration in a different manner.

Consistent Estimation of a Censored Demand System and Welfare Analysis: The 2012 VAT Reform in Spain

This paper analyses the effects that the 2012 VAT reform in Spain had on households’ welfare, focusing on a major expenditure group: food and non-alcoholic beverages. Households’ demands are modeled as a two-stage Quadratic Almost Ideal Demand System, which is then estimated by means of a consistent two-step estimator introduced in Tauchmann (2010) and not previously used in studies of this type. This procedure allows consistent imposition of the traditional parameter restrictions that utility maximisation requires in the context of a censored model. Our results show that the welfare loss and the increment in the tax bill increase with income. We also show that expenditure on food and non-alcoholic beverages grows less than proportionately with income. Consequently, households with lower income experience a greater welfare loss relative to their income levels. In short, the 2012 VAT reform in Spain, focusing on this expenditure group, can be considered as regressive.

Population age structure and private consumption in Spain

In this paper we study the effect of population age distribution upon private consumption expenditure in Spain from 1964 to 1997 using aggregate data. We obtain four main results. First, changes in the population pyramid have substantial effects upon the behaviour of private consumption. Second, the pattern of the coefficients of the demographic variables is not consistent with the simplest version of the life cycle hypothesis. Third, we estimate the impact of the demographic transition upon consumption and find positive values associated with episodes in which the shares of groups of individuals with expenditure levels higher (lower) than the mean increased (decreased). Fourth, the results are robust to alternative specifications for the population age distribution.

Income Taxation and Finite Horizons in a Human Capital Model

We address the issue ofcapital vs. labor income taxation in an overlapping generationsmodel with a positive externality in the human capital production.We compare the performance of the economy in the steady stateunder different tax policies. Three results are obtained. First,the size of the tax revenue required strongly affects the optimal(welfare maximizing) capital-labor income tax portfolio. Inparticular, a zero physical capital income tax rate need notbe optimal. Second, the way in which the finite life cycle issplit between the working and the retirement period also matters.And third, the size of the externality in the human capital productionalso affects the optimal income tax rate mix.

Comprehensive income taxation, investments in human and physical capital, and productivity A note

Abstract We build up this short note on the Nerlove et al. (1993) paper published in this journal. We identify a computational error in that paper regarding the results on welfare analysis.

The Economic Consequences of the Libyan Spring: A Synthetic Control Analysis

Abstract In 2011 a wave of revolutionary movements, the so-called Arab Spring, spread in the Middle East and North Africa. Libya was one of the most affected countries, ending Gaddafi’s dictatorship after an international intervention and a civil war. This paper assesses the effects that this revolution had on Libyan economy. The analysis is made by means of the synthetic control method. Our estimates for the 2011–2014 period show (i) a cumulative loss in the growth rate of per capita real GDP of 64.15%; (ii) a cumulative loss in per capita real GDP of 56,548 dollars; and (iii) a cumulative loss in the aggregate real GDP of 350.5 billion dollars.