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Ageing and the Relative Price of Nontradeables

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  • Leon Bettendorf

    ()
    (Erasmus University Rotterdam)

  • Hans Dewachter

    ()
    (Cath. University of Leuven)

Abstract

In this paper we identify the effects of ageing on the relative price of nontradeables versus tradeables. We consider two cases. In a first specification, age effects only account for short-run dynamics. An alternative case allows for permanent age effects. Estimating the respective cases by means of an ECM on a panel of OECD countries we find significant effects of demographic composition on the relative prices, even after correcting for the standard explanatory variables. Simulations based on population projections of the UN show that ageing might substantially contribute to inflationary pressures in the near future.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 07-064/2.

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Date of creation: 24 Aug 2007
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Handle: RePEc:dgr:uvatin:20070064

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Keywords: relative price of nontradeables; age-specific effects; productivity differentials;

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  8. Jose De Gregorio & Alberto Giovannini & Holger C. Wolf, 1993. "International Evidence on Tradables and Nontradables Inflation," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 93-17, New York University, Leonard N. Stern School of Business, Department of Economics.
  9. Charles Engel, 1995. "Accounting for U.S. Real Exchange Rate Changes," NBER Working Papers 5394, National Bureau of Economic Research, Inc.
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  12. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 9526, Faculty of Economics, University of Cambridge.
  13. Charles Engel, 2003. "Expenditure Switching and Exchange-Rate Policy," NBER Chapters, National Bureau of Economic Research, Inc, in: NBER Macroeconomics Annual 2002, Volume 17, pages 231-300 National Bureau of Economic Research, Inc.
  14. Bergstrand, Jeffrey H, 1991. "Structural Determinants of Real Exchange Rates and National Price Levels: Some Empirical Evidence," American Economic Review, American Economic Association, American Economic Association, vol. 81(1), pages 325-34, March.
  15. Börsch-Supan, Axel, 2001. "Labor market effects of population aging," Sonderforschungsbereich 504 Publications, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim 07-26, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  16. repec:fth:harver:1490 is not listed on IDEAS
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Cited by:
  1. Udo Kreickemeier & Frode Meland, . "International Trade, Union Wage Premia, and Welfare in General Equilibrium," Discussion Papers 11/05, University of Nottingham, GEP.
  2. Max Groneck & Christoph Kaufmann, 2014. "Relative Sectoral Prices and Population Ageing: A Common Trend," Working Paper Series in Economics, University of Cologne, Department of Economics 69, University of Cologne, Department of Economics.

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