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Demographic aging and long-run economic growth in Germany

Author

Listed:
  • Ochsner, Christian
  • Other, Lars
  • Thiel, Esther
  • Zuber, Christopher

Abstract

We study the long-run interaction between Germany's economic growth trajectory and demographic aging. Using a comprehensive dataset, we leverage the classical production function approach to estimate potential output growth between 1970 and 2070. We account for the inherent uncertainty in our projections using Bayesian estimation techniques. Overall, Germany's potential output growth up to 2070 will be low if current economic trends persist. In particular, the diminishing labor volume, coupled with sluggish total factor productivity and investment trend growth, contributes to the decline. Our results highlight the significance of demographic factors in shaping economic trajectories and the critical need for policy interventions to mitigate adverse effects. Our analysis can serve as valuable inputs for formulating long-term economic policies.

Suggested Citation

  • Ochsner, Christian & Other, Lars & Thiel, Esther & Zuber, Christopher, 2024. "Demographic aging and long-run economic growth in Germany," Working Papers 02/2024, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    • Handle: RePEc:zbw:svrwwp:284412
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    demographic aging; production function; potential output; Germany; long-run forecast; economic growth;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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