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The Young, the Old, and the Restless: Demographics and Business Cycle Volatility

Listed author(s):
  • Henry Siu

    ()

    (Department of Economics University of British Columbia)

  • Nir Jaimovich

In this paper we investigate the consequences of demographic change for business cycle analysis. We find that changes in the age composition of the labor force account for a significant fraction of the variation in business cycle volatility observed in the US and other G7 economies. During the postwar period, these countries have experienced dramatic demographic change, though details regarding extent and timing differ from place to place. Using panel data methods, we exploit this variation to show that the age composition of the workforce has a large and statistically significant effect on cyclical volatility. We conclude by relating these findings to the recent decline in US business cycle volatility. Through simple quantitative accounting exercises, we find that demographic change accounts for a significant part of this moderation

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File URL: http://repec.org/sed2006/up.6522.1140049707.pdf
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Paper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 815.

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Date of creation: 03 Dec 2006
Handle: RePEc:red:sed006:815
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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