Aging, Secular Stagnation and the Business Cycle

Author/Editor:

Callum Jones

Publication Date:

March 23, 2018

Electronic Access:

Download PDF. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

As of 2015, U.S. log output per capita was 12 percent below what its pre-2008 linear trend would predict. To understand why, I develop and estimate a model of the US with demographics, real and monetary shocks, and the occasionally binding ZLB on nominal rates. Demographic changes generate slow-moving trends in the real interest rate, employment, and productivity. I find that demographics alone can explain one-third of the gap between log output per capita and its linear trend in 2015. Demographics also lowered real rates, causing the ZLB to bind between 2009 and 2015, contributing to the slow recovery after the Great Recession.

Series:

Working Paper No. 18/67

Subject:

English

Publication Date:

March 23, 2018

ISBN/ISSN:

9781484345405/1018-5941

Stock No:

WPIEA2018067

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

45

Please address any questions about this title to publications@imf.org