IMAGE is a research project at Netspar. It applies the Computable General Equilibrium (or CGE) methodology to questions about taxation, social security and macroeconomics in the Netherlands.
An important focus of the project is the problem of ageing. As in most Western countries, the composition of the Dutch population is changing in favor of the elderly. As the baby boom generation reaches retirement, the dependency ratio (the number of people on pensions compared to the working population) will rise sharply.
This graph indicates the size of the phenomenon. The rise in the dependency ratio will be
over 50 per cent in the Dutch case. To study the repercussions of this change,
we use an economic model with overlapping generations of the type introduced by
Auerbach and Kotlikoff.
This model tracks the consequences of ageing, such as
the distribution of welfare over generations. It can be used study the effects of policy measures,
including the scope for fiscal policy and public pension reform issues.
Other subjects which will be analysed using the IMAGE model are the consequences of labour and capital market imperfections.