Macroeconomic Effects of Projected Population Aging in Industrial Countries

Masson, Paul R.; Tryon, Ralph W.

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Macroeconomic Effects of Projected Population Aging in Industrial Countries

IMF Working Paper No. 90/5

32 Pages Posted: 15 Feb 2006

See all articles by Paul R. Masson

Paul R. Masson

International Monetary Fund (IMF) - Research Department; The Brookings Institution

Ralph W. Tryon

Board of Governors of the Federal Reserve System

Date Written: January 1990

Abstract

The effects of population aging are examined with the aid of a theoretical model and simulations of MULTIMOD. An older population will consume more of aggregate disposable income, require higher government expenditure, and decrease labor supply. These effects should raise real interest rates and lower the capital stock and output. Effects on current balances will depend on the relative speed and extent of aging. Simulations of projected demographic changes suggest that by 2025, real interest rates would be increased by several percentage points and net foreign assets increased in the United States, and decreased in Japan and Germany, as a result.

JEL Classification: 224, 431, 840

Suggested Citation: Suggested Citation

Masson, Paul R. and Tryon, Ralph, Macroeconomic Effects of Projected Population Aging in Industrial Countries (January 1990). IMF Working Paper No. 90/5, Available at SSRN: https://ssrn.com/abstract=884535