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Age Structure and Inflation Dynamics in Pacific Island Economies

Author

Listed:
  • August Letlet

    (Reserve Bank of Vanuatu, Vanuatu)

  • Karan Rai

    (Jaipuria Institute of Management, Noida, India)

  • Bhavesh Garg

    (Indian Institute of Technology Ropar, Punjab, India)

Abstract

This study uses the panel of six Pacific Island Countries (PICs) to investigate the relationship between changing age structures and inflation. The findings suggest that both aggregated and disaggregated shares of the working-age population exert disinflationary pressure. This supports the life cycle hypothesis, which postulates that people in their productive years tend to save and produce more than they consume, fostering economic stability and managing inflation. Conversely, the findings indicate that old-age dependency contributes to inflationary pressures. These insights underscore the importance of demographic dynamics in shaping inflation trends and provide valuable guidance for policymakers aiming to maintain price stability

Suggested Citation

  • August Letlet & Karan Rai & Bhavesh Garg, 2026. "Age Structure and Inflation Dynamics in Pacific Island Economies," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 29(1), pages 1-20, February.
    • Handle: RePEc:idn:journl:v:29:y:2026:i:1a:p:1-20
    DOI: https://doi.org/10.59091/2460-9196.2760
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    References listed on IDEAS

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    More about this item

    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

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