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Medium-Run Implications of Changing Demographic Structures for the Macro-Economy

Author

Listed:
  • Yunus Aksoy
  • Henrique S. Basso
  • Ron P. Smith

Abstract

While there may be an important, but transitory, cyclical component in the poor performance of the past decade, we will emphasise the secular forces: the impact of demographic structure and innovation. We draw on the empirical and theoretical work reported in Aksoy, Basso, Smith and Grasl (2015) , ABSG, about the impact of changes in demographic structure on macroeconomic outcomes. This suggests that changes in age profile not only have significant implications for savings, investment, real interest rates and growth but also for innovation. The size of the effects seems plausible. For instance, if in 2015 the UK had the 1970 age structure, it would have added 0.68 percentage points to the long-run annual growth rate. The model suggests that the population ageing predicted for the next decades will tend to reduce output growth and real interest rates across OECD countries.

Suggested Citation

  • Yunus Aksoy & Henrique S. Basso & Ron P. Smith, 2017. "Medium-Run Implications of Changing Demographic Structures for the Macro-Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 241(1), pages 58-64, August.
    • Handle: RePEc:sae:niesru:v:241:y:2017:i:1:p:r58-r64
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    Cited by:

    1. Stähler, Nikolai, 2021. "The Impact of Aging and Automation on the Macroeconomy and Inequality," Journal of Macroeconomics, Elsevier, vol. 67(C).
    2. Thomas Ziesemer & Anne von Gässler, 2021. "Ageing, human capital and demographic dividends with endogenous growth, labour supply and foreign capital," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 20(2), pages 129-160, May.

    More about this item

    Keywords

    population age profile; medium-term; output growth; innovation; lifecycle; Kuznets cycles;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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