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Population Ageing and Price Level in Japan

Author

Listed:
  • Chee-Hong Law

    (Universiti Sains Malaysia)

Abstract

This paper estimates the cointegration between population ageing and inflation in Japan using the augmented autoregressive distributed lag model. The method provides a complete indication of cointegration and avoids false conclusions from a unit root test. Moreover, the transmission channel from ageing to the price level is investigated using the pairwise Granger causality. Based on the annual data from 1961 to 2018, a cointegration relationship is found, and the deflationary effect of ageing in Japan is confirmed. Additionally, the young dependency ratio inflates the price level in Japan. Lastly, ageing influences the price level via its impact on the labour supply.

Suggested Citation

  • Chee-Hong Law, 2021. "Population Ageing and Price Level in Japan," Malaysian Journal of Economic Studies, Faculty of Business and Economics, University of Malaya & Malaysian Economic Association, vol. 58(2), pages 339-353, December.
    • Handle: RePEc:mjr:journl:v:58:y:2021:i:2:p:339-353
    DOI: 10.22452/MJES.vol58no2.8
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    More about this item

    Keywords

    Ageing; Japan; augmented ARDL; transmission channels;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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