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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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References

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  9. repec:fth:harver:1490 is not listed on IDEAS
  10. Kenneth Rogoff, 1992. "Traded Goods Consumption Smoothing and the Random Walk Behavior of the Real Exchange Rate," NBER Working Papers 4119, National Bureau of Economic Research, Inc.
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  16. Börsch-Supan, Axel, 2001. "Labor market effects of population aging," Sonderforschungsbereich 504 Publications 07-26, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
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Cited by:
  1. Kreickemeier, Udo & Meland, Frode, 2011. "International Trade, Union Wage Premia,and Welfare in General Equilibrium," Working Papers in Economics 04/11, University of Bergen, Department of Economics.
  2. Max Groneck & Christoph Kaufmann, 2014. "Relative Sectoral Prices and Population Ageing: A Common Trend," Working Paper Series in Economics 69, University of Cologne, Department of Economics.

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