June 20, 2007

GAMMA; a simulation model for ageing, pensions and public finances

To answer policy questions that have intergenerational implications, a computable simulation model should obey four conditions, it should: incorporate long-term demographic developments; include a detailed modelling of the public sector; decompose the population into several generations; account for the behaviour of the various economic agents.

This document describes and illustrates a model that meets all these conditions. It is an applied general equilibrium model that is based on generational accounting principles named GAMMA (Generational Accounting Model with Maximizing Agents).

Authors

Nick Draper
Alex Armstrong