The Impact of Demographics on Productivity and Inflation in Japan

Author/Editor:

Niklas J Westelius ; Yihan Liu

Publication Date:

December 8, 2016

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Is Japan’s aging and, more recently, declining population hampering growth and reflation efforts? Exploiting demographic and economic variation in prefectural data between 1990 and 2007, we find that aging of the working age population has had a significant negative impact on total factor productivity. Moreover, prefectures that aged at a faster pace experienced lower overall inflation, while prefectures with higher population growth experienced higher inflation. The results give strong support to the notion that demographic headwinds can have a non-trivial impact on total factor productivity and deflationary pressures.

Series:

Working Paper No. 16/237

Subject:

English

Publication Date:

December 8, 2016

ISBN/ISSN:

9781475559712/1018-5941

Stock No:

WPIEA2016237

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

18

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