## 1. Demographic Impact on Growth of Real GDP per capita (PPP-based)

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### Major findings on demographic trends and channels
- Two fundamental drivers: fertility and mortality.
- UN World Population Prospects (2013) baseline:
  - Total fertility rate: around 5 on average in the 1960s; currently around 2.5; projected to settle just above 2 by the end of the 21st century.
- Regional and country patterns:
  - Less developed regions: fertility as high as about 6 around 1960; currently higher than world average.
  - More developed areas: fertility below 3 in the 1950s and 1960s; below 2 for about thirty years starting around 1985; projected to move back up to around 2 in the long run.
  - Korea: fertility above 4 in 1950 and 1980, fell rapidly thereafter; dropped below 2 around the 1990s; has remained significantly below 1.5 in the last couple of decades and declined recently to about 1.2.
- Life expectancy and population growth:
  - World-average life expectancy for someone born in 1955 is close to 50 years; more developed regions significantly above 60 years.
  - Population growth rate has been decreasing since the mid-20th century; OECD total population growth expected to enter negative territory around 2050.
  - Japan: total population began to decline from 2009; Germany: decline from mid-2000s; Korea expected to follow from mid-2030s.
- Age-structure dynamics:
  - Working-age population share increased in OECD until shortly after 2000, then declined steadily.
  - Dependency ratio around 50 percent at the turn of the century; Korea as low as 40 percent then; projected to increase steadily, reaching about 100 percent for Japan and Korea in long-run projections.

### Theoretical and empirical channels
- Two modeling approaches:
  - Constant age-specific behavior (accounting effects).
  - Behavioral/institutional/global-response approach (includes behavioral reactions, policy responses, international diversification).
- Lifecycle and macro channels:
  - Life-cycle hypothesis: net borrowers in youth, net savers in working years, dis-savers in elderly years.
  - Demographic change affects savings, investment, current account, fiscal balances, and potentially inflation via demand, supply, and asset-price channels.
- Measurement choices:
  - Paper uses population growth rate and shares of working-age (15–64) and elderly (65 and over) as primary demographic measures; dependency ratios used for savings/investment/current account regressions.

### Data and methodological setup
- Panel: 30 OECD economies, 1960–2013.
- Main macro outcomes: growth of real GDP per capita (PPP-based), current account/GDP, savings/GDP, investment/GDP, government budget balance/GDP, inflation rate.
- Regression specification: Y_it = α + β Demo_it + γ Z_it + ε_it; fixed-effects for OECD panel; OLS for Japan; IV used in some specifications (instruments include secondary school enrollment and lagged values).
- Key controls by regression:
  - Growth: secondary school enrollment, investment/GDP, budget balance/GDP, inflation, openness.
  - Current account/savings/investment: budget balance/GDP, net foreign assets/GDP, terms-of-trade growth, real GDP growth, openness.
  - Inflation: terms-of-trade growth, real GDP growth, M2 growth, change in budget balance/GDP.
- Detrending: inflation and population growth detrended using a quadratic trend.

### Empirical estimates — growth of real GDP per capita (selected coefficients)
- General message: population size and aging adversely affect real GDP per capita growth; investment/GDP and low inflation support growth.
- Selected OECD fixed-effects coefficients (from Table 1; multiple columns reported):
  - Population Growth: -0.686; -1.194; -1.130; 0.075; IV columns include -0.621 and -0.504.
  - Share of 65 and over: -0.211; -0.261; -0.122; IV columns include -0.590; -0.614; -0.365.
  - Share of 15-64: -0.132; -0.201; -0.090; IV column coefficient 0.010.
  - Life expectancy (when included): -0.198; IV shows -0.363.
  - Inflation: -0.090; -0.101; -0.103; -0.100 (significant at 1% in reported columns).
  - Investment / GDP: 0.272; 0.244; 0.248; 0.244 (significant at 1%).
- Japan (OLS): demographic effects on per capita growth are weaker and sometimes ambiguous; inflation coefficient remains significantly negative across specifications.

### Quantitative implications for real variables, savings, investment, and current account
- Bivariate patterns: rising elderly share tends to improve current account mainly via reduced investment; greater working-age share improves current account via larger increase in savings than investment.
- Selected multivariate coefficients (Table 2, OECD fixed-effects and Japan OLS):
  - Population Growth (OECD): CA/GDP -0.397; S/GDP -0.776; I/GDP -0.185.
  - Population Growth (Japan OLS): CA/GDP 2.050; S/GDP -7.740; I/GDP -10.113 (Japan coefficients significant at 1%).
  - Share of 65 and over (OECD): S/GDP -0.942; I/GDP -0.486 (negative and significant).
  - Life expectancy (OECD): S/GDP 0.379 (p-value 0.019**).
  - Dependency ratios (OECD):
    - Old Dependency: S/GDP -0.560; I/GDP -0.332 (negative and significant).
    - Young Dependency: weaker/marginal effects (e.g., CA/GDP 0.143, p-value 0.080*).
  - Japan: population growth and life expectancy influence savings and investment negatively and significantly (e.g., S/GDP -8.125; I/GDP -10.213; p-values 0.000*** and 0.001***).

### Fiscal impacts (budget balance, revenue, expenditure per GDP)
- OECD (Table 3) patterns:
  - Population Growth: positive effect on budget balance (e.g., 1.771; 1.472; 1.489).
  - Share of 65 and over: negative effect on budget balance (e.g., -0.288).
  - Share of 15-64: mixed effects; positive effects on revenue/expenditure in some specifications.
  - Openness: negative effect on expenditure in some specifications.
- Japan (OLS): population growth effects mixed; some significant coefficients (e.g., population growth 1.979, p-value 0.001***). Elderly share shows positive and significant coefficients on expenditure (e.g., expenditure coefficients 1.156; 1.104, p-values 0.000***).

### Inflation effects — empirical evidence and conditioning factors
- Theoretical ambiguity: aging and declining population have both deflationary and inflationary channels; empirical determination is necessary.
- OECD fixed-effects (Table 4) — selected coefficients:
  - Population Growth: 0.339; 0.524; 0.549; 0.317 (positive effects on inflation in many regressions; significance varies across columns).
  - Share of 65 and over: -0.176; -0.125; -0.137 (significantly negative).
  - Share of 15-64: -0.101; -0.103; in other columns -0.330; -0.476 (negative/ambiguous).
  - Terms-of-trade change (TOT change): -0.145 (p-values 0.005***).
  - Real GDP growth: -0.750; -0.795; -0.799 (negative and highly significant).
  - M2 growth: 0.192; 0.183; 0.180 (positive and significant).
  - Budget Balance Change: 0.129; 0.153 (positive).
- Japan (OLS) — selected coefficients:
  - Population Growth: 6.689; 6.363; 6.708; 6.725 (significant at 0.005***, 0.003***, 0.001***, 0.001*** respectively).
  - Share variables: less consistently significant in Japan; money growth often insignificant in Japanese regressions.
- Overall implication: shrinking and aging populations could exert sizable deflationary impact in coming years, particularly in rapidly ageing and declining-population economies.

### Key data summary statistics (selected Appendix 1)
- Population Growth: Obs 1354, Mean 0.735, Std. Dev. 0.631, Min -0.482, Max 3.172
- Population Growth (detrended): Obs 1354, Mean -0.017, Std. Dev. 0.300, Min -1.194, Max 1.103
- Share of 15-64: Obs 1354, Mean 65.299, Std. Dev. 3.589, Min 49.549, Max 72.942
- Share of 65 and over: Obs 1354, Mean 12.672, Std. Dev. 3.769, Min 3.316, Max 25.078
- Life Expectancy: Obs 1354, Mean 74.992, Std. Dev. 4.804, Min 47.575, Max 83.580
- Per Capita Growth: Obs 1255, Mean 2.343, Std. Dev. 3.425, Min -14.613, Max 12.748
- Inflation: Obs 1342, Mean 7.323, Std. Dev. 11.369, Min -4.480, Max 188.005

### Policy implications and recommendations
- Macroeconomic frameworks should be revisited to account for demographic shifts:
  - Monetary policy:
    - Equilibrium real interest rate may depend on population growth and age composition; relationship is hard to pin down.
    - Measurement of the output gap and potential output must account for changing population dynamics, labor participation, and retirement age.
    - If demographic change brings significant deflationary pressures, original inflation targets may become unrealistic; maintaining targets could force prolonged balance-sheet expansion that may be unsustainable.
    - Consider incorporating demographic impacts indirectly into policy reaction functions (via real interest rate, output gap, inflation expectations).
  - Fiscal policy:
    - Demographic change directly affects fiscal sustainability through targeted transfers and age-related spending.
    - Immediate policy actions recommended: combination of sound monetary policy, fiscal consolidation, and bold structural reforms to mitigate adverse effects.
  - For developing countries with high fertility and younger populations: plan for potential future reversals in demographic trends and make intertemporally consistent policy choices.
- Research priorities:
  - More theoretical modeling with micro foundations to analyze channels linking demographics and macro variables.
  - Additional empirical work to clarify channels through which demographics affect inflation, asset prices, and the macroeconomy.
  - Further examination of housing prices and asset-price channels.

*Source: _wp14210 - 1. Demographic Impact on Growth of Real GDP per capita (PPP-based).*

### 1. Demographic Impact on Growth of Real GDP per capita (PPP-based) ..............................15

### 1. Demographic Impact on Growth of Real GDP per capita (PPP-based) ..............................15

### Major sections (chapter outline)
- 1. Demographic Impact on Growth of Real GDP per capita (PPP-based) ..............................15
- 2. Demographic Impact on Current Account, Savings, and Investment ..................................17
- 3. Demographic Impact on Budget Balance, Revenue, and Expenditure per GDP .................18
- 4. Demographic Impact on Inflation ........................................................................................20

### Figures listed in the content unit
- 1. Total Fertility Rate (children per woman) .............................................................................5
- 2. Total Fertility by Major Economies (children per woman) ...................................................6
- 3. Life Expectancy (years at birth) .............................................................................................7
- 4. Total Population Growth (in percent) ....................................................................................8
- 5. Working-Age Population Share of Total Population (in percent) .........................................8
- 6. Dependency Ratios for Major Economies .............................................................................9

### Appendixes included
- Appendix 1. Summary of Key Variables and List of Sample OECD Countries ......................................24
- Appendix 2. Variable Definitions and Sources ........................................................................................25
- Appendix 3. Demographic Trends and Projections of China ...................................................................26
- Appendix 4. Relationship between Macro Variables and Elderly Share ..................................................27
- Appendix 5. Relationship between Macro Variables and Working-age Share ........................................28
- Appendix 6. Relationship between Macro Variables and Population Growth .........................................29

*Source: _wp14210 - 1. Demographic Impact on Growth of Real GDP per capita (PPP-based) ..............................15*

### References .............................................................................................................

### _wp14210 - References

### I. Introduction
- Demographic change is a key determinant of future economic and social outcomes, operating through savings and investment behaviors, labor market decisions, and aggregate demand and supply responses.
- In the medium to long run, demographic changes affect aggregate supply via changes in labor supply and productivity; in the short run they affect aggregate demand through changes in consumption and investment tied to age-earnings profiles.
- The paper analyzes macroeconomic effects of demographic changes empirically, with special attention to inflation.
- Demographic effects depend on:
  - The extent of anticipation of demographic changes.
  - Nominal and real frictions and institutional aspects.
  - Behavioral responses.
- Two proxies used to capture demographic changes:
  - Population growth rate for total size changes.
  - Shares of working-age and elderly population, dependency ratios, and life expectancy for composition/aging.
- Paper scope and structure:
  - Section 2: stylized facts and projections (fertility, mortality, population growth, shares of working-age and elderly population).
  - Section 3: literature review on demographic impacts including inflation.
  - Section 4: data, methodology, and empirical findings on inflation and macroeconomic impact.
  - Final section: conclusions and policy implications.

### II. Description of Demographic Changes
- Two fundamental drivers: fertility and mortality.
- UN’s World Population Prospects (2013) baseline assessments:
  - Total fertility rate: around 5 on average in the 1960s; currently around 2.5; projected to settle just above 2 by the end of the 21st century.
- Regional differences:
  - Less developed regions: fertility as high as about 6 around 1960; currently higher than world average.
  - More developed areas: fertility below 3 in the 1950s and 1960s; below 2 for about thirty years starting around 1985; projected to move back up to around 2 in the long run.
- Country examples:
  - Five industrialized countries (US, UK, France, Germany, Japan): fertility stayed between 2 and 4 in the 1950s and 60s and has fluctuated around 2 from the 1970s onward.
  - Korea: fertility above 4 in 1950 and 1980, fell rapidly thereafter; dropped below 2 around the 1990s; has remained significantly below 1.5 in the last couple of decades and declined recently to about 1.2.
- Mortality and life expectancy:
  - World-average life expectancy for someone born in 1955 is close to 50 years; more developed regions significantly above 60 years.
  - Life expectancy increases for later cohorts, contributing to population growth and aging when combined with falling fertility.
- Population growth trends and projections:
  - Population growth rate has been decreasing since the mid-20th century.
  - UN projection: world population growth remains positive; OECD total population growth expected to enter negative territory around 2050.
  - Japan: total population began to decline from 2009; Germany: decline from mid-2000s; Korea expected to follow from mid-2030s.
- Working-age share and dependency ratios:
  - Working-age population share increased in OECD until shortly after 2000, then declined steadily due to lower fertility and higher longevity.
  - Turnaround dividing a rising trend until the 1990s and a declining trend from about the 2010s.
  - Declines particularly rapid in Japan and Korea.
  - Dependency ratio (almost mirror of working-age share): around 50 percent at the turn of the century; Korea as low as 40 percent then; projected to increase steadily, reaching about 100 percent for Japan and Korea in long-run projections.
- Empirical plotting note:
  - Simple pooled scatter plots (elderly share, working-age share, population growth vs per capita real GDP growth, saving/GDP, investment/GDP, current account/GDP, budget balance/GDP, inflation) show generally insignificant relationships except for government revenue and expenditure, motivating panel analysis with country- or time-specific structure.

### III. Literature Review
- Two broad modeling approaches:
  - Constant age-specific behavior (accounting effects): captures demographic transitions’ accounting implications but may mislead if behaviors and institutions change.
  - Behavioral/institutional/global-response approach: includes behavioral reactions, policy responses, international diversification; more complex but richer.
- Demographics and growth:
  - Population growth typically treated as exogenous in growth theory; both population growth and aging affect real interest rate and inflation depending on utility specification.
  - Ambiguity: in infinite-horizon models with growing household size, real interest rate may or may not depend on population growth rate.
- Empirical findings on real variables:
  - Callen et al. (2004): per capita GDP growth positively correlated with changes in working-age population share and negatively correlated with changes in elderly share.
  - Choi et al. (2014): impending demographic change in Korea negatively impacts real GDP growth; decomposition shows population contribution to Korea’s GDP growth fallen to 0.4 percent from the 2010s with age-structure change becoming negative.
  - Bloom, Cunning, and Fink (2010): population ageing tends to lower labor force participation and savings, potentially slowing growth; behavioral responses and policy reforms can mitigate effects.
  - Borsch-Supan, Hartl and Ludwig (2014): in Europe, negative growth effects from aging can be offset by reforms and adaptation but behavioral reactions may offset gains.
- Savings, investment, current account, fiscal effects:
  - Life-cycle hypothesis: net borrowers in youth, net savers in working years, dis-savers in elderly years.
  - Larger working-age share tends to improve current account; higher elderly share tends to worsen it.
  - Higher working-age share raises revenues; aging raises pension, health, long-term care spending, worsening fiscal balance.
  - Existing studies broadly confirm these hypotheses with variations.
- Inflation and monetary aspects:
  - Limited research; possible deflationary pressures from declining and aging populations via lower aggregate demand, negative wealth effects from falling asset prices, and shifts in relative demand.
  - Katagiri (2012): population aging modeled as unexpected demand-structure shocks caused about 0.3 percentage point deflationary pressure in Japan using a multi-sector new Keynesian model.
  - Bullard et al. (2012): baby boom can generate temporarily higher inflation; aging population dynamics exert downward pressure on inflation or cause deflation, via redistribution dynamics and preferences for higher real returns among the old.
  - Anderson, Botman, and Hunt (2014): modified IMF DSGE model calibrated to Japan finds substantial deflationary pressures from population aging, mainly through declining growth and falling land prices (model simulation rather than empirical validation).
- Measurement considerations:
  - Choice of demographic variables matters: fertility and mortality are drivers but have long lags; age-structure indicators (share of working-age population, share of elderly population, dependency ratios) are commonly used empirically.
  - This paper uses shares of working-age population and elderly population as primary variables; dependency ratios used in regressions involving savings, investment, and current account balance.

### IV. Empirical Findings
#### IV.1 Data and Methodology
- Dataset:
  - Panel covering 30 OECD economies for 1960–2013.
- Macroeconomic outcomes analyzed:
  - Growth of real GDP per capita.
  - Current account balance/GDP.
  - Savings/GDP.
  - Investment/GDP.
  - Government budget balance/GDP.
  - Inflation rate.
- Methodological motivation:
  - Building on bivariate relationships illustrated earlier, the analysis proceeds with panel methods (country- and time-specific structures) to identify demographic impacts on the listed macroeconomic measures.

*Italic line: Source: _wp14210 - References (PDF chapter/section).*

### Appendix 4-6, we proceed to a multivariate analysis controlling for other explanatory factors.

### _wp14210 - Appendix 4-6, we proceed to a multivariate analysis controlling for other explanatory factors.

### Methodology
- Regression specification: Y_it = α + β Demo_it + γ Z_it + ε_it, where Y is a macroeconomic variable, Demo are demographic measures, Z is a set of controls; subscripts i and t denote country and time.
- Estimation: fixed-effects for cross-country panel (OECD) and OLS for single-country (Japan) annual regressions. Instrumental variables (IV) used in some specifications (secondary school enrollment, Budget balance/GDP, Inflation, Investment/GDP instrumented using lagged values).
- Demography data source: United Nations World Population Prospects: The 2012 Revision (published 2013). Macroeconomic/control variables: IMF WEO, IFS, World Bank WDI; PPP real GDP per capita from Penn World Table version 7.1; NFA from updated Lane and Milesi-Ferretti (2007).
- Controls by regression type:
  - Growth regressions: secondary school enrollment ratio, investment/GDP, budget balance/GDP, inflation rate, openness.
  - Current account/savings/investment regressions: budget balance/GDP, net foreign assets/GDP, terms-of-trade growth, real GDP growth, openness.
  - Budget balance regression: terms-of-trade growth, openness.
  - Inflation regression: terms-of-trade growth, real GDP growth, M2 growth, change in budget balance/GDP.
- Detrending: Inflation and population growth detrended using a quadratic trend to capture deviations from anticipated trends.

### Growth impact (real GDP per capita)
- General message: population size and aging adversely affect real GDP per capita growth; investment/GDP and low inflation support growth.
- Key empirical coefficients (OECD fixed-effects; selected coefficients from Table 1):
  - Population Growth: -0.686; -1.194; -1.130; 0.075; instrumental/IV columns include -0.621 and -0.504 (p-values reported in table).
  - Share of 65 and over: -0.211; -0.261; -0.122; instrumental/IV columns include -0.590; -0.614; -0.365.
  - Share of 15-64: -0.132; -0.201; -0.090; IV column coefficient 0.010.
  - Life expectancy (when included): -0.198; IV shows -0.363.
  - Inflation: consistently negative (e.g., -0.090; -0.101; -0.103; -0.100; significance at 1% in all reported columns).
  - Investment / GDP: consistently positive (e.g., 0.272; 0.244; 0.248; 0.244; significance at 1%).
- Japan (OLS): demographic effects on per capita growth are weaker and sometimes ambiguous; inflation coefficient remains significantly negative across specifications.

### Impact on current account, savings, and investment
- Bivariate patterns (Appendices 4–6): rising elderly share tends to improve current account mainly via a reduction in investment; greater working-age share improves current account via larger increase in savings than investment.
- Multivariate findings (Table 2, OECD fixed-effects and Japan OLS):
  - Population Growth: generally negative effects on CA/GDP, S/GDP, I/GDP (OECD: -0.397; -0.776; -0.185; Japan: 2.050; -7.740; -10.113 with Japan coefficients significant at 1%).
  - Share of 65 and over: negative and significant for savings and investment in OECD (e.g., S/GDP -0.942; I/GDP -0.486 with p-values showing significance).
  - Life expectancy: positive and significant effect on savings in OECD (0.379; p-value 0.019**), reflecting longer lifespans raising the need to spread consumption.
  - Using dependency ratios (Old Dependency, Young Dependency):
    - Old Dependency: negative on savings and investment (OECD columns: e.g., S/GDP -0.560; I/GDP -0.332 with significance).
    - Young Dependency: weaker/ambiguous effects (some coefficients marginally significant, e.g., CA/GDP 0.143, p-value 0.080*).
  - Japan: population growth and life expectancy influence savings and investment negatively and significantly (e.g., S/GDP -8.125; I/GDP -10.213; p-values 0.000*** and 0.001***).

### Fiscal impact (budget balance, revenue, expenditure per GDP)
- OECD (Table 3):
  - Population Growth: positive effect on budget balance (e.g., 1.771; 1.472; 1.489 with p-values showing significance in many columns).
  - Share of 65 and over: negative effect on budget balance (e.g., -0.288; significance noted), suggesting aging raises expenditure more than revenue.
  - Share of 15-64: mixed effects; some specifications show positive effects on revenue/expenditure.
  - Openness: negative effect on expenditure in some specifications (significant coefficients reported).
- Japan (OLS):
  - Population Growth: mixed influence on budget balance across specifications; some significant coefficients (e.g., 1.979, p-value 0.001***).
  - Share variables are significant in their impact on fiscal variables; elderly share shows positive and significant coefficients on expenditure in multiple specifications (e.g., expenditure coefficients 1.156; 1.104 with p-values 0.000***).

### Inflation impact
- Theoretical ambiguity: aging and declining population have demand- and supply-side channels that can push inflation either down or up; empirical determination is required.
- Empirical findings (Table 4):
  - OECD (fixed-effects): population growth generally affects inflation positively in regressions (e.g., population growth coefficients include 0.339, 0.524, 0.549, 0.317) though some p-values indicate weak significance across columns; share of 65 and over has a significantly negative effect on inflation (e.g., -0.176; -0.125; -0.137 with p-values indicating significance).
  - Working-age share: negative/ambiguous effects reported in some specifications (e.g., share of 15-64 coefficients -0.101; -0.103; in other columns -0.330; -0.476).
  - Conditioning variables with consistent signs:
    - TOT change: negative (e.g., -0.145 across many columns; p-values 0.005***).
    - GDP growth: negative and highly significant (e.g., -0.750; -0.795; -0.799).
    - M2 growth: positive and significant in OECD columns (e.g., 0.192; 0.183; 0.180).
    - Budget Balance Change: positive in OECD columns (e.g., 0.129; 0.153).
  - Japan (OLS): population growth influences inflation significantly positively in all reported regressions (e.g., 6.689; 6.363; 6.708; 6.725 with p-values 0.005***, 0.003***, 0.001***, 0.001***). Share variables less strong in Japan. Money growth is puzzlingly insignificant in Japanese regressions.
- Overall implication: ongoing demographic changes—shrinking and aging—could exert a sizable deflationary impact in coming years, particularly in rapidly ageing and declining-population economies.

### Conclusions and policy implications
- Empirical summary:
  - Population growth tends to affect real variables negatively (often insignificantly) but affects inflation positively in many specifications.
  - Aging (higher share of 65 and over) generally depresses real GDP per capita growth and can reduce savings and investment; it tends to exert downward pressure on inflation in OECD regressions.
  - Fiscal impacts are mixed; aging raises expenditure pressures and can worsen budget balances depending on specification and country.
- Policy recommendations and implications (textual conclusions drawn from empirical results):
  - Macroeconomic policy frameworks—including monetary and fiscal policies—need to be revisited in light of demographic shifts.
  - Monetary policy implications:
    - Equilibrium real interest rate may depend on population growth and age composition; relationship is hard to pin down.
    - Measurement of the output gap and potential output must account for changing population dynamics, labor participation, and retirement age.
    - If demographic change brings significant deflationary pressures, original inflation targets may become unrealistic; maintaining targets could force prolonged balance-sheet expansion that may be unsustainable.
    - Consider incorporating demographic impacts indirectly into policy reaction functions (e.g., via real interest rate, output gap, inflation expectations).
  - Fiscal policy implications:
    - Fiscal tools are often targeted to specific groups; demographic changes directly affect fiscal policy design and sustainability.
    - Immediate policy actions recommended: combination of sound monetary policy, fiscal consolidation, and bold structural reforms to mitigate adverse effects of demographic change.
  - For developing countries with high fertility and younger populations: consider potential impacts when demographic trends reverse and make intertemporally consistent policy choices.
- Research gaps and recommendations:
  - Further theoretical modeling (macro models with micro foundations) to analyze channels linking demographics and macro variables.
  - Additional empirical work to clarify channels through which demographic changes affect inflation, asset prices, and the macroeconomy.
  - Examination of housing prices and asset price channels remained inconclusive in this paper.

### Key data and summary statistics (selected)
- Appendix 1 sample statistics (OECD sample):
  - Population Growth: Obs 1354, Mean 0.735, Std. Dev. 0.631, Min -0.482, Max 3.172
  - Population Growth (detrended): Obs 1354, Mean -0.017, Std. Dev. 0.300, Min -1.194, Max 1.103
  - Share of 15-64: Obs 1354, Mean 65.299, Std. Dev. 3.589, Min 49.549, Max 72.942
  - Share of 65 and over: Obs 1354, Mean 12.672, Std. Dev. 3.769, Min 3.316, Max 25.078
  - Life Expectancy: Obs 1354, Mean 74.992, Std. Dev. 4.804, Min 47.575, Max 83.580
  - Per Capita Growth: Obs 1255, Mean 2.343, Std. Dev. 3.425, Min -14.613, Max 12.748
  - Inflation: Obs 1342, Mean 7.323, Std. Dev. 11.369, Min -4.480, Max 188.005
- Notes on variable definitions and sources are provided in Appendix 2 (UN population prospects; WEO, WDI; PWT v7.1; Lane and Milesi-Ferretti NFA dataset).

*Source: _wp14210 - Appendix 4-6, we proceed to a multivariate analysis controlling for other explanatory factors.*

### REFERENCES

### _wp14210 - REFERENCES

### Academic articles and books
- An, C. and Jeon, S. (2006), “Demographic change and economic growth: An inverted-U shape relationship” Economic Letters, Volume 92, Issue 3, 447-454.
- Batini, Nicoletta Tim Callen, and Warwick McKibbin (2006), “The Global Impact of Demographic Change” IMF Working Paper, 06/09.
- Blanchard, Olivier, Giovanni Dell’Ariccia, and Paolo Mauro (2010), “Rethinking Macroeconomic Policy” IMF Staff Position Note, 10/03.
- Blanchard, Olivier, Giovanni Dell’Ariccia, and Paolo Mauro (2013), “Rethinking Macro Policy II: Getting Granular” IMF Staff Discussion Note, 13/03.
- Bloom, D., Canning, D., and Fink, G. (2010), “Implications of population ageing for economic growth” Oxford Review of Economic Policy, 26(4): 583-612.
- Bullard, James, Carlos Garriga, and Christopher J. Waller  (2012), “Demographics, Redistribution, and Optimal Inflation” Federal Reserve Bank of St. Louis Review, 419-439.
- Börsch-Supan, Axel, Klaus Härtl, and Alexander Ludwig (2014), "Aging in Europe: Reforms, International Diversification, and Behavioral Reactions" American Economic Review, 104(5): 224-29.
- Rausch, S. (2009), Macroeconomic Consequences of Demographic Change, Springer.
- Romer, D. (2012), Advanced Macroeconomics, McGraw-Hill.

### IMF Working Papers and IMF publications
- Anderson, D., Botman, D., and Hunt, B. (2014), “Is Japan’s Population Aging Deflationary?” IMF Working paper, 14/139.
- Besanger, S., Guest, R., and McDonald, I. (2000), “Demographic Change in Asia - The Impact on Optimal National Saving, Investment, and the Current Account” IMF Working Paper, 00/115.
- Callen, Tim, Nicoletta Batini, and Nicola Spatafora (2004), “How will demographic change affect the global economy?” World Economic Outlook, Chapter 3.
- Faruqee, Hamid (2002), “Population Aging and Its Macroeconomic Implications - A Framework for Analysis” IMF Working Paper, 02/16.
- Imam, Patrick (2013), “Shock from Graying: Is the Demographic Shift Weakening Monetary Policy Effectiveness” IMF Working Paper, 13/191.
- International Monetary Fund (2000), “Implications of aging population will pose crucial policy issues for Japanese authorities” IMF Survey Vol.29, October 23, 2000.
- Lee, Il Houng, Xu Qingjun, and Murtaza Syed (2013), “China s Demography and its Implications” IMF Working Paper, 13/82.
- Erik Lueth (2008), “Capital Flows and Demographics An Asian Perspective,” IMF Working Paper, 08/8.
- Park, Seok Gil (2012), “Quantifying Impact of Aging Population on Fiscal Space,” IMF Working Paper, 12/164.
- Phillips, S., et al. (2013), “External Balance Assessment (EBA) Methodology” IMF Working Paper, 13/272.
- Tamirisa, Natalia T. and Hamid Faruqee (2006), “Macroeconomic Effects and Policy Challenges of Population Aging” IMF Working Paper, 06/95.

### Central bank and national research papers
- Ikeda, D. and M. Saito (2012), “The Effects of Demographic Changes on the Real Interest Rate in Japan” Bank of Japan Working Paper Series, No. 12-E-3.
- Muto, I., Oda, T., Sudo, N. (2012), “Macroeconomic Impact of Population Ageing in Japan: A Perspective from an Overlapping Generations Model” Bank of Japan Working Paper Series, No. 12-E-9.
- Katagiri, M. (2012), “Economic Consequences of Population Aging in Japan: effects through changes in demand structure” Institute for Monetary and Economic Studies Discussion Paper, No. 2012-E-3.
- Choi, W. et al. (2014), “Demographic waves, growth potential, and policy options” presented at 2014 Bank of Korea International Conference, June 2014.

### Other relevant studies and data sources
- Heston, Alan, Robert Summers, and Bettina Aten (2012), Penn World Table Version 7.1, Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania.
- Philip R. Lane and Gian Maria Milesi-Ferretti (2007),  "The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970–2004", Journal of International Economics 73, November, 223-250.
- Terrones, Marco (2004), “The Global House Price Boom” World Economic Outlook, Chapter 2.
- Lee, Il Houng, Xu Qingjun, and Murtaza Syed (2013), “China s Demography and its Implications” IMF Working Paper, 13/82.
- Erik Lueth (2008), “Capital Flows and Demographics An Asian Perspective,” IMF Working Paper, 08/8.
- United Nations, Department of Economic and Social Affairs, Population Division (2013), World Population Prospects: The 2012 Revision.

*Source: _wp14210 - REFERENCES*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2014/_wp14210.pdf_