Demographic Structure and Macroeconomic Trends

68 Pages Posted: 5 Oct 2015

See all articles by Yunus Aksoy

Yunus Aksoy

Birkbeck University of London

Henrique S. Basso

Birkbeck College, University of London

Ron Smith

Birkbeck College

Tobias Grasl

University of London - Birkbeck College

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Date Written: October 5, 2015

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.

Keywords: population age profile, medium-term, output growth, innovation, lifecycle

JEL Classification: E32, J11

Suggested Citation

Aksoy, Yunus and Basso, Henrique S. and Smith, Ron P. and Grasl, Tobias, Demographic Structure and Macroeconomic Trends (October 5, 2015). Banco de Espana Working Paper No. 1528, Available at SSRN: https://ssrn.com/abstract=2669321 or http://dx.doi.org/10.2139/ssrn.2669321

Yunus Aksoy (Contact Author)

Birkbeck University of London ( email )

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Henrique S. Basso

Birkbeck College, University of London ( email )

Malet Street
London, WC1E 7HX
United Kingdom

Ron P. Smith

Birkbeck College ( email )

Malet Street
London WC1E 7HX
United Kingdom
+44 207 631 6413 (Phone)
+44 207 631 6416 (Fax)

Tobias Grasl

University of London - Birkbeck College ( email )

Malet Street
London, WC1E 7HX
United Kingdom

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