The Demographic Deficit

41 Pages Posted: 13 Nov 2017 Last revised: 26 Feb 2018

See all articles by Thomas F. Cooley

Thomas F. Cooley

New York University - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER)

Espen Henriksen

Department of Financial Economics, BI Norwegian Business School

Date Written: November 21, 2017

Abstract

There has been a slowdown in growth in the world’s most advanced economies. In this paper we argue that changing demographics, in particular aging populations combined with increased life expectancy, may be part of the explanation for why we observe slower growth, falling interest rates and falling productivity growth. Using Japan and the U.S. in the years prior to the financial crises as a case study, we provide estimates of the growth deficit that arises from an aging cohort structure and increasing life expectancy. We also provide projections of the impact of predictable demographic changes on future growth in the U.S. and Japan.

Keywords: mortality, fertility, life-cycle saving, growth accounting

JEL Classification: E1, E2, J1, J2

Suggested Citation

Cooley, Thomas F. and Henriksen, Espen, The Demographic Deficit (November 21, 2017). Available at SSRN: https://ssrn.com/abstract=3067781 or http://dx.doi.org/10.2139/ssrn.3067781

Thomas F. Cooley

New York University - Leonard N. Stern School of Business ( email )

44 West Fourth Street, 7-180
Room 7-85
New York, NY 10012
United States
212-998-0870 (Phone)
212-995-4218 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Computer Research Center
Cambridge, MA 02138
United States

Espen Henriksen (Contact Author)

Department of Financial Economics, BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

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