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Demographic Structure and Macroeconomic Trends

Author

Listed:
  • Yunus Aksoy
  • Henrique S. Basso
  • Ron P. Smith
  • Tobias Grasl

Abstract

The effect of changes in demographic structure on medium-run trends of key macroeconomic variables is estimated using a Panel VAR of 21 OECD economies. The panel data variability assists the identification of direct effects of demographics, while the dynamic structure uncovers long-term effects. Young and old dependants are found to have a negative impact while workers contribute positively. We propose a theoretical model, highlighting the relationship between demographics, innovation and growth, whose simulations match our empirical findings. The current trend of population aging and reduced fertility is found to reduce output growth and real interest rates across OECD countries.

Suggested Citation

  • Yunus Aksoy & Henrique S. Basso & Ron P. Smith & Tobias Grasl, 2016. "Demographic Structure and Macroeconomic Trends," CESifo Working Paper Series 5872, CESifo.
    • Handle: RePEc:ces:ceswps:_5872
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    More about this item

    Keywords

    population age profile; medium-term; output growth; innovation; life-cycle; Kuznets cycles;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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