Population growth, life-cycle saving, and international differences in steady-state optimal saving rates.
Life-cycle savings theories have been a seminal development in analyses of the relationship between rational savings patterns for individuals and the accumulation of wealth or capital at the level of the society as a whole. Applications of the theories in industrialized countries never investigated the significance of large differences in birth and death rates across societies. The strong demographic components of life-cycle saving analysis are here the center of focus. Illustrative general numerical applications of a modified version of the life-cycle approach suggest that mortality differentials comparable to those presently encountered among nations are consistent with very large differentials in steady-state optimal ratios of wealth-to-income. Specific application to Peru of the model estimated by Tobin for the United States indicates that high levels of mortality, current Peruvian birth rates, and Peruvian age-income profiles imply optimal rational savings rates far below those of the United States.
D001723:Birth Rate; D003431:Cross-Cultural Comparison; D006801:Humans; D007182:Income; D007449:Investments; D008017:Life Expectancy; D010568:Peru; D011158:Population Growth; D012179:Retirement; D014481:United States