Hostname: page-component-cd9895bd7-dzt6s Total loading time: 0 Render date: 2024-12-22T23:54:51.901Z Has data issue: false hasContentIssue false
  • English
  • Français

Medium-Run Implications of Changing Demographic Structures for the Macro-Economy

Published online by Cambridge University Press:  01 January 2020

Yunus Aksoy ,
Henrique S. Basso  and
Ron P. Smith
Yunus Aksoy*
Affiliation:
Birkbeck, University of London
Henrique S. Basso*
Affiliation:
Banco de España
Ron P. Smith*
Affiliation:
Birkbeck, University of London
*
e-mail: [email protected]: [email protected]
e-mail: [email protected]
e-mail: [email protected]: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

While there may be an important, but transitory, cyclical component in the poor performance of the past decade, we will emphasise the secular forces: the impact of demographic structure and innovation. We draw on the empirical and theoretical work reported in Aksoy, Basso, Smith and Grasl (2015), ABSG, about the impact of changes in demographic structure on macroeconomic outcomes. This suggests that changes in age profile not only have significant implications for savings, investment, real interest rates and growth but also for innovation. The size of the effects seems plausible. For instance, if in 2015 the UK had the 1970 age structure, it would have added 0.68 percentage points to the long-run annual growth rate. The model suggests that the population ageing predicted for the next decades will tend to reduce output growth and real interest rates across OECD countries.

Keywords

population age profilemedium-termoutput growthinnovationlifecycleKuznets cyclesE32J11
Type
Research Articles
Information
National Institute Economic Review , Volume 241 , August 2017 , pp. R58 - R64
Copyright
Copyright © 2017 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D. and Restrepo, P. (2017), ‘Secular stagnation? The effect of aging on economic growth in the age of automation’, NBER Working Paper 23077.CrossRefGoogle Scholar
Aksoy, Y., Basso, H.S., Smith, R.P. and Grasl, T. (2015), ‘Demographic structure and macroeconomic trends’, Working Paper 1528, Banco de Espana.CrossRefGoogle Scholar
Comin, D. and Gertler, M. (2006), ‘Medium term business cycles’, American Economic Review, 96(3), pp. 523–51.CrossRefGoogle Scholar
Favero, C., Gozluklu, A.E. and Yang, H. (2016), ‘Demographics and the behavior of interest rates’, IMF Economic Review, Palgrave Macmillan, International Monetary Fund, 64(4), November, pp. 732–76.Google Scholar
Feldstein, M. (2017), ‘Underestimating the real growth of GDP, personal income and productivity’, Journal of Economic Perspectives, 31(2), pp. 145–64.CrossRefGoogle Scholar
Goodhart, C., Pradhan, M. and Pardeshi, P. (2015), ‘Could demographics reverse three multi-decade trends?’, Global Issues, Morgan Stanley & Co. International Plc., London.Google Scholar
Gordon, R.J. (2014), ‘The demise of US economic growth restatement, rebuttals and reflections’, Working Paper 19895, National Bureau of Economic Research.CrossRefGoogle Scholar
Hamilton, J.D. (2017), ‘Why you should never use the Hodrick Prescott filter’, Working Paper University of San Diego.CrossRefGoogle Scholar
Hansen, A. (1939), ‘Economic progress and declining population growth’, American Economic Review, 29(1), pp. 1–15.Google Scholar
Irmen, I. and Litina, A. (2016), ‘Population aging and inventive activity’, CE-Sifo Working Paper 584.Google Scholar
Jones, B.F. (2010), ‘Age and great invention’, The Review of Economic Statistics, 92(1), pp. 1–14.CrossRefGoogle Scholar
Kuznets, S. (1960), ‘Population change and aggregate output’, in Demographic and Economic Change in Developed Countries, National Bureau of Economic Research, pp. 324–51.Google Scholar
Nordhaus, W.D. (2015), ‘Are we approaching an economic singularity? Information technology and the future of economic growth’, Cowles Foundation Discussion Paper 2021.CrossRefGoogle Scholar
Reinhart, C.M. and Rogoff, K.S. (2009), This Time is Different: Eight Centuries of Financial Folly, Princeton: Princeton University Press.Google Scholar
Summers, L.H. (2015), ‘Have we entered an age of secular stagnation? IMF Fourteenth Annual Research Conference in Honor of Stanley Fischer', Washington, DC’, IMF Economic Review, Palgrave Macmillan, International Monetary Fund, 63 (1), May, pp. 277–80.Google Scholar