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Population Ageing and the Macroeconomy

Author

Listed:
  • Noëmie Lisack
  • Rana Sajedi
  • Gregory Thwaites
Abstract
We quantify the impact of demographic change on real interest rates, house prices and household debt in an overlapping-generations model. Falling birth and death rates across advanced economies can explain much of the observed fall in real interest rates and the rise in house prices and household debt. Since households maintain relatively high wealth levels throughout retirement, these trends will persist as population ageing continues. Countries ageing relatively slowly, like the US, will increasingly accumulate net foreign liabilities. The availability of housing as an alternative store of value attenuates these trends, while raising the retirement age has limited effects.

Suggested Citation

  • Noëmie Lisack & Rana Sajedi & Gregory Thwaites, 2019. "Population Ageing and the Macroeconomy," Working papers 745, Banque de France.
    • Handle: RePEc:bfr:banfra:745
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    References listed on IDEAS

    as
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    Cited by:

    1. Heo, Ye Jin, 2022. "Population aging and house prices: Who are we calling old?," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    2. Vlieghe, Gertjan, 2022. "Demographics and other constraints on future monetary policy," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    3. Giacomo Mangiante, 2022. "Demographic Trends and the Transmission of Monetary Policy," Cahiers de Recherches Economiques du Département d'économie 22.04, Université de Lausanne, Faculté des HEC, Département d’économie.
    4. Bonfatti, Andrea & İmrohoroğlu, Selahattin & Kitao, Sagiri, 2022. "Japan and the allocation puzzle in an aging world," Journal of Economic Dynamics and Control, Elsevier, vol. 145(C).
    5. Jieun Lee & Hosung Jung, 2023. "Demographic Shifts, Macroprudential Policies, and House Prices," International Journal of Central Banking, International Journal of Central Banking, vol. 19(5), pages 1-47, December.
    6. Bailey, Andrew & Cesa-Bianchi, Ambrogio & Garofalo, Marco & Harrison, Richard & McLaren, Nick & Sajedi, Rana & Piton, Sophie, 2023. "Structural change, global R* and the missing-investment puzzle," Bank of England working papers 997, Bank of England.

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    More about this item

    Keywords

    : Demographics; ageing; natural interest rates; macroeconomic trends.;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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