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Population age structure and real exchange rates in the OECD

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Listed author(s):
  • Andreas Andersson
  • Par Osterholm

Abstract

Macroeconomic theory predicts that variations in population cohort sizes will lead to demographically induced real exchange rate movements. While such effects have previously been established for individual countries, this paper exploits cross-sectional time series data to test the prediction for a larger number of economies. A reduced form model with population age shares as regressors is estimated using a panel of 25 OECD countries between 1971 and 2002. The results confirm that demographic structure has significant explanatory power for the real exchange rate and the estimated relationship supports age structure effects in accordance with the life cycle hypothesis.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/14765280500520261
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Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 20 (2006)
Issue (Month): 1 ()
Pages: 1-18

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Handle: RePEc:taf:intecj:v:20:y:2006:i:1:p:1-18
DOI: 10.1080/14765280500520261
Contact details of provider: Web page: http://www.tandfonline.com/RIEJ20

Order Information: Web: http://www.tandfonline.com/pricing/journal/RIEJ20

Keywords: Demography; real exchange rates; panel data; forecasts;

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Cited by:

  1. Aloy, Marcel & Gente, Karine, 2009. "The role of demography in the long-run Yen/USD real exchange rate appreciation," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 654-667, December.
  2. Kamrul Hassan, 2011. "The linkage between relative population growth and purchasing power parity: Cross country evidence," International Journal of Development Issues, Emerald Group Publishing, vol. 10(2), pages 154-169, July.
  3. Hoarau, Jean-François, 2009. "L’approche microéconomique du taux de change réel d’équilibre : une revue de la littérature théorique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 85(4), pages 403-436, décembre.

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