Macroeconomic implications of demographic developments in the euro area
AbstractThis paper examines the macroeconomic consequences of future demographic trends for economic growth, financial markets and public finances. It shows that in the absence of reforms and responses by economic agents, the currently projected demographic trends imply a decline in average real GDP growth and a severe burden in terms of pay-as-you-go pension and health care systems. Population ageing will change the financial landscape, with a potentially larger role for financial intermediaries and asset prices. All this points to a need to closely monitor demographic change also from a monetary policy perspective. While population projections are surrounded by considerable uncertainty and the effects of demographic change tend to be drawn out, the magnitude of the potential effects calls for an early recognition of this issue. This paper provides some input to the examination of possible policy issues.
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Bibliographic InfoPaper provided by European Central Bank in its series Occasional Paper Series with number 51.
Length: 64 pages
Date of creation: Aug 2006
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-03 (All new papers)
- NEP-BEC-2006-09-03 (Business Economics)
- NEP-CBA-2006-09-03 (Central Banking)
- NEP-EEC-2006-09-03 (European Economics)
- NEP-FMK-2006-09-03 (Financial Markets)
- NEP-FOR-2006-09-03 (Forecasting)
- NEP-MAC-2006-09-03 (Macroeconomics)
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