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Abstract

Both advanced and developing economies are experiencing a rapid process of population aging that will shape macroeconomic dynamics over the next decades. Indeed, demographic changes affect not only long-run trends (Krueger and Ludwig, 2007; Aksoy et al., 2019; Carvalho et al., 2016), but also short-term fluctuations (Jaimovich and Siu, 2009; Wong, 2016). We argue that population aging can also influence the effectiveness of fiscal policy. This effectiveness is often summarized by the size of the fiscal multipliers. In this feature, we highlight a novel determinant of the size of the government consumption spending fiscal multipliers: the age structure of an economy