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Demographic structure and macroeconomic trends

Author

Listed:
  • Yunus Aksoy

    () (University of London)

  • Ron P. Smith

    () (University of London)

  • Tobias Grasl

    () (University of London)

  • Henrique S. Basso

    () (Banco de España)

Abstract

The effect of changes in demographic structure on medium-run trends of key macroeconomic variables is estimated using a panel VAR of 21 OECD economies. The panel data variability assists the identication of direct effects of demographics, while the dynamic structure uncovers long-term effects. Young and old dependants are found to have a negative impact while workers contribute positively. We propose a theoretical model, highlighting the relationship between demographics, innovation and growth, whose simulations match our empirical findings. The current trend of population aging and reduced fertility is found to reduce output growth and real interest rates across OECD countries

Suggested Citation

  • Yunus Aksoy & Ron P. Smith & Tobias Grasl & Henrique S. Basso, 2015. "Demographic structure and macroeconomic trends," Working Papers 1528, Banco de España;Working Papers Homepage.
  • Handle: RePEc:bde:wpaper:1528
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    References listed on IDEAS

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    Cited by:

    1. Frankovic, Ivan & Kuhn, Michael, 2018. "Health insurance, endogenous medical progress, and health expenditure growth," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 01/2018, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
    2. Carvalho, Carlos & Ferrero, Andrea & Nechio, Fernanda, 2016. "Demographics and real interest rates: Inspecting the mechanism," European Economic Review, Elsevier, vol. 88(C), pages 208-226.
    3. Tatiana Didier & M. Ayhan Kose & Franziska Ohnsorge & Lei Sandy Ye1, 2015. "Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?," Policy Research Notes (PRNs) 101741, The World Bank.
    4. Nickel, Christiane & Bobeica, Elena & Lis, Eliza & Sun, Yiqiao, 2017. "Demographics and inflation," Working Paper Series 2006, European Central Bank.
    5. Gabriele Fiorentini & Alessandro Galesi & Gabriel Pérez-Quirós & Enrique Sentana, 2018. "The rise and fall of the natural interest rate," Working Papers 1822, Banco de España;Working Papers Homepage.
    6. Favero, Carlo A. & Galasso, Vincenzo, 2015. "Demographics and the Secular Stagnation Hypothesis in Europe," CEPR Discussion Papers 10887, C.E.P.R. Discussion Papers.
    7. Yavuz Arslan & Martina Jašová & Elod Takáts, 2016. "The inflation process," BIS Papers chapters,in: Bank for International Settlements (ed.), Inflation mechanisms, expectations and monetary policy, volume 89, pages 23-40 Bank for International Settlements.
    8. Carlo A. Favero & Arie E. Gozluklu & Haoxi Yang, 2016. "Demographics and the Behavior of Interest Rates," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(4), pages 732-776, November.
    9. Shekhar Aiyar & Christian H Ebeke, 2016. "The Impact of Workforce Aging on European Productivity," IMF Working Papers 16/238, International Monetary Fund.
    10. Lisa Gianmoena & Vicente Rios, 2018. "The Determinants of Resilience in European Regions During the Great Recession: a Bayesian Model Averaging Approach," Discussion Papers 2018/235, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    11. M. Marx & B. Mojon & F. Velde, 2017. "Why Have Interest Rates Fallen far Below the Return on Capital," Working papers 630, Banque de France.
    12. Bullard, James B. & Singh, Aarti, 2017. "Nominal GDP Targeting With Heterogeneous Labor Supply," Working Papers 2017-16, Federal Reserve Bank of St. Louis, revised 16 Jan 2019.
    13. Edle von Gaessler, Anne & Ziesemer, Thomas, 2017. "Ageing, human capital and demographic dividends with endogenous growth, labour supply and foreign capital," MERIT Working Papers 043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    14. Ferrero, Giuseppe & Gross, Marco & Neri, Stefano, 2017. "On secular stagnation and low interest rates: demography matters," Working Paper Series 2088, European Central Bank.
    15. Marco Del Negro & Domenico Giannone & Marc Giannoni & Andrea Tambalotti, 2018. "Global Trends in Interest Rates," NBER Chapters,in: NBER International Seminar on Macroeconomics 2018, pages 248-262 National Bureau of Economic Research, Inc.
    16. Juselius, Mikael & Takáts, Előd, 2018. "The enduring link between demography and inflation," Research Discussion Papers 8/2018, Bank of Finland.
    17. Henrique S. Basso & Omar Rachedi, 2018. "The young, the old, and the government: demographics and fiscal multipliers," Working Papers 1837, Banco de España;Working Papers Homepage.
    18. Ahmed, S. Amer & Vargas Da Cruz,Marcio Jose & Quillin,Bryce Ramsey & Schellekens,Philip, 2016. "Demographic change and development : a global typology," Policy Research Working Paper Series 7893, The World Bank.
    19. Nicole Maestas & Kathleen J. Mullen & David Powell, 2016. "The Effect of Population Aging on Economic Growth, the Labor Force and Productivity," NBER Working Papers 22452, National Bureau of Economic Research, Inc.
    20. Manuel, Lancastre, 2016. "Age Milestones and Low Interest Rates, an Analytic Approach," MPRA Paper 85046, University Library of Munich, Germany.
    21. Nicole Maestas & Kathleen J. Mullen & David Powell, 2016. "The Effect of Population Aging on Economic Growth, the Labor Force and Productivity," Working Papers WR-1063-1, RAND Corporation.
    22. Fedotenkov, Igor, 2018. "Population ageing and inflation with endogenous money creation," Research in Economics, Elsevier, vol. 72(3), pages 392-403.
    23. Bańbura, Marta & Albani, Maria & Ambrocio, Gene & Bursian, Dirk & Buss, Ginters & de Winter, Jasper & Gavura, Miroslav & Giordano, Claire & Júlio, Paulo & Le Roux, Julien & Lozej, Matija & Malthe-Thag, 2018. "Business investment in EU countries," Occasional Paper Series 215, European Central Bank.
    24. repec:eee:ecmode:v:68:y:2018:i:c:p:435-449 is not listed on IDEAS

    More about this item

    Keywords

    population age profile; medium-term; output growth; innovation; lifecycle;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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