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Demographic Structure and Macroeconomic Trends

Author

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

Abstract

We estimate the effect of changes in demographic structure on long-term trends of key macroeconomic variables using a Panel VAR for 21 OECD economies from 1970–2014. The panel data variation assists the identification of demographic effects, while the dynamic structure, incorporating multiple channels of influence, uncovers long-term effects. We propose a theoretical model, relating demographics, innovation and growth, whose simulations match our empirical findings. The current trend of population aging and low fertility is projected to reduce output growth, investment and real interest rates across OECD countries.

Suggested Citation

  • Yunus Aksoy & Henrique S. Basso & Ron P. Smith & Tobias Grasl, 2019. "Demographic Structure and Macroeconomic Trends," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(1), pages 193-222, January.
    • Handle: RePEc:aea:aejmac:v:11:y:2019:i:1:p:193-222
    Note: DOI: 10.1257/mac.20170114
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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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