Ageing and Growth in the Small Open Economy

We construct an overlapping generations model for the small open economy whichincorporates a realistic description of the mortality process. Agents engage in educational activities at the start of life and thus create human capital to be used later on in life for production purposes. Depending on the strength of the intergenerational externality in thehuman capital production function, the model gives rise to exogenous or endogenous growth. The effects of demographic shocks and fiscal stimuli on the growth path are derived, both atimpact, during transition, and in the long run.