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Inflation and demography through time

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  • Juselius, Mikael
  • Takáts, Előd

Abstract

Demography accounts for a large share of low frequency inflation variation in 22 countries from 1870 to 2016. The dependent population (young and old) is associated with higher, and the working age population with lower inflation. The relationship is robust across different sub-samples and specifications, including dynamic Phillips curve settings, suggesting that it is not spurious. The observed pattern is broadly consistent with delayed monetary policy responses to demography-induced changes in the natural interest rate.

Suggested Citation

  • Juselius, Mikael & Takáts, Előd, 2021. "Inflation and demography through time," Journal of Economic Dynamics and Control, Elsevier, vol. 128(C).
    • Handle: RePEc:eee:dyncon:v:128:y:2021:i:c:s0165188921000713
    DOI: 10.1016/j.jedc.2021.104136
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    3. Park, Cyn-Young & Shin, Kwanho & Kikkawa, Aiko, 2022. "Demographic change, technological advance, and growth: A cross-country analysis," Economic Modelling, Elsevier, vol. 108(C).
    4. Jiazi Chen & Zhiwu Hong & Linlin Niu, 2022. "Forecasting Interest Rates with Shifting Endpoints: The Role of the Demographic Age Structure," Working Papers 2022-06-25, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    5. Joseph Kopecky, 2021. "Okay Boomer... Excess Money Growth, Inflation, and Population Aging," Trinity Economics Papers tep0721, Trinity College Dublin, Department of Economics, revised Oct 2021.
    6. Ambrocio, Gene, 2023. "Demographic aging and the New Keynesian Phillips Curve," Bank of Finland Research Discussion Papers 16/2023, Bank of Finland.
    7. Banerjee, Ryan & Contreras, Juan & Mehrotra, Aaron & Zampolli, Fabrizio, 2024. "Inflation at risk in advanced and emerging market economies," Journal of International Money and Finance, Elsevier, vol. 142(C).
    8. Yugang He & Zhuoqi Teng, 2024. "Navigating Uncharted Waters: The Transformation of the Bank of Korea’s Monetary Policy in Response to Global Economic Uncertainty," Mathematics, MDPI, vol. 12(11), pages 1-24, May.
    9. Anthony Edo & Jacques Melitz, 2024. "The Controversy over European Inflation in 1500–1700: Precious Metals or Population? The English Evidence," Open Economies Review, Springer, vol. 35(3), pages 659-685, July.
    10. Kopecky, Joseph, 2023. "Population age structure and secular stagnation: Evidence from long run data," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).

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    More about this item

    Keywords

    Demography; Inflation; Phillips curve;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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