Public pensions and declining fertility in a small open economy: an intertemporal equilibrium approach.

"The aging of the population in several industrial countries has raised concern about the financing of pay-as-you-go public pension schemes. This paper employs a numerical applied general equilibrium model of the Netherlands to explore how a unilateral temporary decline in fertility affects a small open economy. It focuses on intergenerational distributional effects as well as on macroeconomic consequences for employment, saving, investment, and external trade and capital flows. Furthermore, it discusses several policy options involving the public pension schemes to cope with the intergenerational distributional and macroeconomic effects of the decline in fertility."