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The impact of population ageing on consumption in spain: revisiting the retirement-consumption puzzle

Author

Listed:
  • Cutanda, Antonio

    (Universidad de Valencia, Valencia, Spain)

  • Sanchis, Juan A.

    (Universidad de Valencia and ERICES, Valencia, Spain)

Abstract

As the proportion of the Spanish population entering retirement continues to grow, the sustainability of the pay-as-you-go social security system is facing increasing pressure. This study examines the implications of this demographic shift on consumption patterns in Spain from 2002 to 2017, focusing specifically on the retirement consumption puzzle using data from the Survey of Households Finances (SHF). Our findings, obtained from various estimation methods, suggest that the average decline in non-durable consumption at retirement is approximately 20%. This is in line with results from other developed economies and exceeds previous estimates for Spain. However, our analysis provides inconclusive results regarding spending on food and beverages. Finally, we observe no significant differences in the responses of working individuals and retirees to changes in interest rates, which suggests that monetary policy does not necessarily have to be adjusted due to the fact that the population is ageing.

Suggested Citation

  • Cutanda, Antonio & Sanchis, Juan A., 2026. "The impact of population ageing on consumption in spain: revisiting the retirement-consumption puzzle," Working Papers 2604, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2604
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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