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Demographic Developments and Their Macroeconomic Impacts

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  • M. Koray Kalafatcilar

Abstract

This study firstly introduces demographic concepts and reveals the different dynamics displayed by emerging and advanced economies. Then, the links between demographic developments and economic activity are discussed. We aim to support our arguments with quantitative findings obtained through a New-Keynesian general equilibrium model. The general equilibrium model, which is calibrated for Turkey, is simulated for the period until 2050 in accordance with changes in demographic exogenous variables. Through this simulation, the path that main macroeconomic variables follow is analyzed. The simulation exercise, conducted through the model which is de-trended with the increases in productivity and population, reveals that, compared to the initial steady state, production factor prices significantly change; real interest rate declines and real wage increases.

Suggested Citation

  • M. Koray Kalafatcilar, 2019. "Demographic Developments and Their Macroeconomic Impacts," Working Papers 1911, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  • Handle: RePEc:tcb:wpaper:1911
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    File URL: http://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2019/19-11
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    More about this item

    Keywords

    Demography; Overlapping generations; Savings; General equilibrium;

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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