Research Article

Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis

Volume: 10 Number: 2 September 17, 2026
TR EN

Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis

Abstract

This study examines the effects of population aging on macroeconomic equilibria within the framework of an Overlapping Generations (OLG)–Pay-As-You-Go (PAYG) model calibrated with Turkish data. The analysis focuses on how the demographic transformation, accelerated by declining fertility rates and increasing life expectancy, affects the social security system, capital accumulation, output, real interest rates, and intergenerational welfare. The model incorporates representative individuals with a two-period life cycle, a Cobb–Douglas production structure, and a PAYG mechanism linked to the old-age dependency ratio. Following the calibration based on demographic and macroeconomic indicators for the Turkish economy during the 2011–2021 period, three different scenarios are simulated: the baseline equilibrium, a population aging shock, and a reform scenario. The findings indicate that an increase in the old-age dependency ratio raises the contribution rate in the PAYG system, weakens the net income and saving capacity of the working generations, and consequently exerts downward pressure on capital intensity and output levels. Moreover, the aging process is found to adversely affect the welfare of younger generations, particularly during the transition period. The reform scenario partially mitigates the pressure on contribution rates and the associated loss in output. Overall, the results demonstrate that population aging generates significant structural implications for social security sustainability and macroeconomic stability in Türkiye.

Keywords

References

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  7. Blanchard, O. J. (1985). Debt, deficits, and finite horizons. Journal of Political Economy, 93(2), 223–247.
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Details

Primary Language

English

Subjects

Applied Macroeconometrics, Macroeconomic Theory, Growth, Policy of Treasury

Journal Section

Research Article

Publication Date

September 17, 2026

Submission Date

March 23, 2026

Acceptance Date

May 26, 2026

Published in Issue

Year 2026 Volume: 10 Number: 2

APA
Özçiftçi, H. (2026). Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis. Fiscaoeconomia, 10(2), 1-28. https://doi.org/10.25295/fsecon.1914361
AMA
1.Özçiftçi H. Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis. FSECON. 2026;10(2):1-28. doi:10.25295/fsecon.1914361
Chicago
Özçiftçi, Hamza. 2026. “Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis”. Fiscaoeconomia 10 (2): 1-28. https://doi.org/10.25295/fsecon.1914361.
EndNote
Özçiftçi H (September 1, 2026) Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis. Fiscaoeconomia 10 2 1–28.
IEEE
[1]H. Özçiftçi, “Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis”, FSECON, vol. 10, no. 2, pp. 1–28, Sept. 2026, doi: 10.25295/fsecon.1914361.
ISNAD
Özçiftçi, Hamza. “Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis”. Fiscaoeconomia 10/2 (September 1, 2026): 1-28. https://doi.org/10.25295/fsecon.1914361.
JAMA
1.Özçiftçi H. Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis. FSECON. 2026;10:1–28.
MLA
Özçiftçi, Hamza. “Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis”. Fiscaoeconomia, vol. 10, no. 2, Sept. 2026, pp. 1-28, doi:10.25295/fsecon.1914361.
Vancouver
1.Hamza Özçiftçi. Population Aging and Macroeconomic Dynamics: A Calibrated OLG–PAYG Analysis. FSECON. 2026 Sep. 1;10(2):1-28. doi:10.25295/fsecon.1914361
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