Savings, fertility and public policy in an OLG small open economy

In an OLG model of a small open economy we analyse the characteristics of saving and fertility under two different public policies: i) constant per capita taxes (and endogenous public debt) and ii) constant per-capita debt (and endogenous stabilizing taxes). Our analysis highlights that a fertility recovery (reduction resp.) requires always a reduction (increase resp.) of taxes, although the implications for public debt management are not trivial, since they depend on the regime the economy is experiencing, i.e. on the relationship between the interest rate and the fertility rate in absence of taxes.