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The demographic deficit

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  • Cooley, Thomas
  • Henriksen, Espen

Abstract

There has been a slowdown in growth in the world’s most advanced economies. In this paper we argue that changing demographics, in particular aging populations combined with increased life expectancy, may be part of the explanation for why we observe slower growth, falling interest rates and falling productivity growth. Using Japan and the U.S. in the years prior to the financial crises as a case study, we provide estimates of the growth deficit that arises from an aging cohort structure and increasing life expectancy. We also provide projections of the impact of predictable demographic changes on future growth in the U.S. and Japan.

Suggested Citation

  • Cooley, Thomas & Henriksen, Espen, 2018. "The demographic deficit," Journal of Monetary Economics, Elsevier, vol. 93(C), pages 45-62.
    • Handle: RePEc:eee:moneco:v:93:y:2018:i:c:p:45-62
    DOI: 10.1016/j.jmoneco.2017.11.005
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    More about this item

    Keywords

    Mortality; Fertility; Life-cycle saving; Labor supply; Growth accounting;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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