Series: Working Papers. 1528.
Author: Yunus Aksoy, Henrique S. Basso, Ron P. Smith and Tobias Grasl.
Published in: American Economic Journal: Macroeconomics, Volume 11, Issue 1, January 2019, Pages 193-222
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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 identication 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.