Ageing and the Current Account Simulations for the Netherlands

Abstract The ageing baby-boom generations in the oecd economies will have an impact on the global supply and demand of capital over the next decades. The size and direction of this impact have been the subject of much research, which we survey. We study the effects of alternative inter-est rate paths for the Dutch economy with the image general equilibrium model, emphasizing developments of the current account. Further simula-tions explore the sensitivity of the outcomes to alternative demographic projections, tax smoothing and exogenous participation increases. We find that tax smoothing is not the appropriate policy to generate a more equi-table intergenerational distribution when changes in the world interest rate are taken into consideration