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Population Aging and the Macroeconomy

Author

Listed:
  • Noémie Lisack

    (Banque de France - Banque de France - Banque de France)

  • Rana Sajedi

    (Bank of England - Bank of England)

  • Gregory Thwaites

    (UON - University of Nottingham, UK)

Abstract

We quantify the impact of demographic change on real interest rates, house prices, and household debt in an overlapping-generations model. Falling birth and death rates across advanced economies can explain much of the observed fall in real interest rates and the rise in house prices and household debt. Since households maintain relatively high wealth levels throughout retirement, these trends will persist as population aging continues. Countries aging relatively slowly, such as the United States, will increasingly accumulate net foreign liabilities. The availability of housing as an alternative store of value attenuates these trends, while raising the retirement age has limited effects.

Suggested Citation

  • Noémie Lisack & Rana Sajedi & Gregory Thwaites, 2021. "Population Aging and the Macroeconomy," Post-Print hal-04459531, HAL.
    • Handle: RePEc:hal:journl:hal-04459531
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    Citations

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    Cited by:

    1. Andrew Bailey & Ambrogio Cesa-Bianchi & Marco Garofalo & Richard Harrison & Nick McLaren & Rana Sajedi & Sophie Piton, 2023. "Structural change, global R* and the missing-investment puzzle," Bank of England working papers 997, Bank of England.
    2. Vlieghe, Gertjan, 2022. "Demographics and other constraints on future monetary policy," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    3. Heo, Ye Jin, 2022. "Population aging and house prices: Who are we calling old?," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    4. Jieun Lee & Hosung Jung, 2023. "Demographic Shifts, Macroprudential Policies, and House Prices," International Journal of Central Banking, International Journal of Central Banking, vol. 19(5), pages 1-47, December.
    5. Giacomo Mangiante, 2022. "Demographic Trends and the Transmission of Monetary Policy," Cahiers de Recherches Economiques du Département d'économie 22.04, Université de Lausanne, Faculté des HEC, Département d’économie.
    6. Bonfatti, Andrea & İmrohoroğlu, Selahattin & Kitao, Sagiri, 2022. "Japan and the allocation puzzle in an aging world," Journal of Economic Dynamics and Control, Elsevier, vol. 145(C).
    7. Nickel, Christiane & Kilponen, Juha & Moral-Benito, Enrique & Koester, Gerrit & Ciccarelli, Matteo & Enders, Almira & Holton, Sarah & Landau, Bettina & Venditti, Fabrizio & Bobeica, Elena & Brand, Cla, 2025. "A strategic view on the economic and inflation environment in the euro area," Occasional Paper Series 371, European Central Bank.
    8. Lee, Jangyoun & Suh, Hyunduk, 2025. "Long-run effects of super low fertility on housing markets," Economic Modelling, Elsevier, vol. 150(C).

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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