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Will ageing lead to a higher real exchange rate for the Netherlands?

  • Casper van Ewijk


  • Maikel Volkerink

Long-term projections for the Netherlands indicate that demand for nontradables – e.g. health care services – will increase relative to supply due to population ageing. If this leads to higher future real exchanges rates this will erode the return of the savings currently made to prepare for ageing. This paper explores the magnitude of potential price effects using a modified version of the ‘two country, four commodity framework’ developed by Obstfeld and Rogoff (2005) to explore the exchange rate effects of the balance of payments reversal in the US. When these price effects are substantial, this may have serious consequences for policies to enhance national saving in the Netherlands.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 197.

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Date of creation: Dec 2011
Date of revision:
Handle: RePEc:cpb:discus:197
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  1. Iscan Talan, 2010. "How Much Can Engel's Law and Baumol's Disease Explain the Rise of Service Employment in the United States?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-43, September.
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  9. Axel Boersch-Supan, 2001. "Labor Market Effects of Population Aging," NBER Working Papers 8640, National Bureau of Economic Research, Inc.
  10. Leon Bettendorf & A. Horst & N. Draper & C. Ewijk & R. Mooij & H. Rele, 2011. "Ageing and the Conflict of Interest Between Generations," De Economist, Springer, vol. 159(3), pages 257-278, September.
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