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Estimating the Relationship between Age Structure and GDP in the OECD Using Panel Cointegration Methods

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  • Österholm, Pär

    () (Department of Economics)

Abstract

Economic theory suggests that variations in countries’ age structure should affect the economy on an aggregate level. This paper investigates the relationship between age structure and GDP in 20 OECD countries using annual data from 1970 to 1999. Using new methodology, the relationship between the variables can be formulated in levels despite the presence of unit roots in the time series. Applying two panel cointegration tests proposed by Pedroni (1995, 1997a, 1999), support is found for a long run relationship between GDP and the number of people in five different age groups. Coefficient estimates from panel regressions support effects in line with the life cycle hypothesis and human capital theory; children and retirees are found to have a negative or relatively smaller positive effect on GDP than productive age groups.

Suggested Citation

  • Österholm, Pär, 2004. "Estimating the Relationship between Age Structure and GDP in the OECD Using Panel Cointegration Methods," Working Paper Series 2004:13, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uunewp:2004_013
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    Cited by:

    1. de la Croix, David & Lindh, Thomas & Malmberg, Bo, 2009. "Demographic change and economic growth in Sweden: 1750-2050," Journal of Macroeconomics, Elsevier, vol. 31(1), pages 132-148, March.
    2. DE LA CROIX, David & LINDH, Thomas & MALMBERG, Bo, 2006. "Growth and longevity from the industrial revolution to the future of an aging society," CORE Discussion Papers 2006064, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Berg, Lennart & Berger, Tommy, 2005. "The Q theory and the Swedish housing market –an empirical test," Working Paper Series 2005:19, Uppsala University, Department of Economics.

    More about this item

    Keywords

    Age structure; GDP; Panel cointegration;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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