The effect of changes in demographic structure on medium-run trends of key macroeconomic variables is estimated using a Panel VAR of 21 OECD economies. The panel data variability assists the identification of direct effects of demographics, while the dynamic structure uncovers long-term effects. Young and old dependants are found to have a negative impact while workers contribute positively. We propose a theoretical model, highlighting the relationship between demographics, innovation and growth, whose simulations match our empirical findings. The current trend of population aging and reduced fertility is found to reduce output growth and real interest rates across OECD countries.JEL Codes: E32, J11

We estimate the effect of changes in demographic structure on long-term trends of key macroeconomic variables using a panel VAR for 21 OECD economies from 1970 –2014. The panel data variation assists the identification of demographic effects, while the dynamic structure, incorporating multiple channels of influence, uncovers long-term effects. We propose a theoretical model, relating demographics, innovation, and growth, whose simulations match our empirical findings. The current trend of population aging and low fertility is projected to reduce output growth, investment, and real interest rates across OECD countries. (JEL E22, E23, E32, E43, J11, J13)

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Financial intermediation and bank spreads are important elements in the analysis of business cycle transmission and monetary policy. We present a simple framework that introduces lending relationships, a relevant feature of financial intermediation that has been so far neglected in the monetary economics literature, into a dynamic stochastic general equilibrium model with staggered prices and cost channels. Our main findings are: (i) banking spreads move countercyclically generating amplified output responses, (ii) spread movements are important for monetary policy making even when a standard Taylor Rule is employed (iii) modifying the policy rule to include a banking spread adjustment improves stabilization of shocks and increases welfare when compared to rules that only respond to output gap and inflation, and finally (iv) the presence of strong lending relationships in the banking sector can lead to indeterminacy of equilibrium forcing the central bank to react to spread movements. JEL Codes: E44, E52, G21

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We propose a model with segmented markets that delivers endogenous variations in term spreads driven by banks' portfolio decisions while facing maturity risk. This predictive power stems from the relation between the slope of the yield curve and the future path of short-term interest rates, and also, from variations in term spreads. While there is * Corresponding

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Recent empirical research documents that the strong short-term relationship between U.S. monetary aggregates on one side and inflation and real output on the other has mostly disappeared since the early 1980s. Using the direct estimate of flows of USD abroad we find that domestic money (currency corrected for the foreign holdings of dollars) contains valuable information about future movements of U.S. inflation and real output. Statistical evidence suggests that the Friedman-Schwartz stylized facts can be reestablished once the focus of analysis is back on the correct measure of domestic monetary aggregates.JEL Classification: E3, E4, E5.