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Demographics and Business Cycle Volatility: A Spurious Relationship?*

* This paper is a replication of an original study

Author

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  • Gerdie Everaert
  • Hauke Vierke

Abstract

This paper replicates the estimation results of three studies on the impact of the age composition of the labor force on business cycle volatility and investigates whether they signal a meaningful long-run relationship. We show that both the volatile-age labor force share variable and the business cycle volatility measure exhibit non-stationary behavior but find no robust evidence of cointegration. Hence, the estimation results reported in the literature may be spurious. This conclusion is further supported by the finding that the strong relationship (i) disappears when cross-sectional dependence is accounted for using the CCEP estimator and (ii) is highly sensitive to small changes in the composition of the sample, to data revisions, and to the exact definition of the volatile-age labor share.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Gerdie Everaert & Hauke Vierke, 2016. "Demographics and Business Cycle Volatility: A Spurious Relationship?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(7), pages 1467-1477, November.
    • Handle: RePEc:wly:japmet:v:31:y:2016:i:7:p:1467-1477
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    Cited by:

    1. Martin Iseringhausen & Hauke Vierke, 2019. "What Drives Output Volatility? The Role of Demographics and Government Size Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 81(4), pages 849-867, August.
    2. Lorenzo Carbonari & Vincenzo Atella & Paola Samà, 2018. "Hours worked in selected OECD countries: an empirical assessment," International Review of Applied Economics, Taylor & Francis Journals, vol. 32(4), pages 525-545, July.
    3. Mario Holzner & Stefan Jestl & David Pichler, 2022. "Public and private pension systems and macroeconomic volatility in OECD countries," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(2), pages 131-168, May.
    4. Milanez Ana, 2020. "Workforce Ageing and Labour Productivity Dynamics," Naše gospodarstvo/Our economy, Sciendo, vol. 66(3), pages 1-13, September.
    5. George Kapetanios & Laura Serlenga & Yongcheol Shin, 2024. "Testing for correlation between the regressors and factor loadings in heterogeneous panels with interactive effects," Advanced Studies in Theoretical and Applied Econometrics, in: Subal C. Kumbhakar & Robin C. Sickles & Hung-Jen Wang (ed.), Advances in Applied Econometrics, pages 147-195, Springer.

    Replication

    This item is a replication of:
  • Nir Jaimovich & Henry E. Siu, 2009. "The Young, the Old, and the Restless: Demographics and Business Cycle Volatility," American Economic Review, American Economic Association, vol. 99(3), pages 804-826, June.

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    1. Demographics and Business Cycle Volatility: A Spurious Relationship? (Journal of Applied Econometrics 2016) in ReplicationWiki

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