Is Japanâ€™s Population Aging Deflationary?

Anderson, Derek; Botman, Dennis; Hunt, Benjamin

doi:10.5089/9781498392129.001

Cited by 46 publications

(39 citation statements)

References 11 publications

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“…Net savers, on the contrary, reduce it. This trend was analysed by Anderson et al (2014), who by using the IMF GIMF Model find deflationary pressures from ageing, stemming mainly from declining GDP growth and falling land prices. Furthermore, empirical research conducted for Germany by Faik (2012) and for a sample of OECD countries by Gajewski (2015) show that demographic ageing exerts downward pressure on prices.…”

Section: Literature Reviewmentioning

confidence: 99%

Population Ageing and Inflation

Broniatowska

2017

Population Ageing

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Recently a view has emerged in the literature that low inflation may also be influenced, among other variables, by demography. However, there is little empirical evidence for this hypothesis. The motivation of this paper is to assess whether inflation is linked to the population age structure, and especially whether an increased old-age dependency ratio is correlated with a lower inflation rate. To check this hypothesis, a panel data model is used. The model is estimated for 32 OECD member economies over the period from 1971 to 2015. We regress the changes in consumer price inflation on a set of macroeconomic variables. The results of the estimations suggest that there is a relation between demography and low-frequency inflation. A larger old-age dependency ratio is indeed correlated with lower inflation. Therefore, ongoing population ageing may exert downward pressure on inflation. This confirms some of the previous empirical findings that ageing is deflationary when related to increased life expectancy.

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Section: Literature Reviewmentioning

confidence: 99%

Population Ageing and Inflation

Broniatowska

2017

Population Ageing

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“…An important observation is that both the 40-64 age cohort and the over 65s in Japan appear to have positive impact on yields, which may be a country specific phenomenon, possibly reflecting a bank-based economy and less interest in financial markets in general. A recent study shows that the savings rate in Japan by age group over the 1998-2010 period has increased for both the 30-44 and 45-49 age cohorts, whilst the 60+ group has turned negative, especially when compared to the prior 1991-1997 period (Anderson et al, 2014).…”

Section: Results For Real Bond Yields: Individual Country Modelsmentioning

confidence: 98%

Do demographic changes matter? A cross-country perspective

Šević

Brawn

2015

Journal of Multinational Financial Management

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“…Several studies exactly show these contradictory findings, see e.g. McMillan and Baesel (1990), Nishimura and Takáts (2012), Yoon, et al (2014), Anderson et al (2014), Juselius and Takáts (2016), and Bobeica et al (2017) 3 .…”

Section: Figure 11 -Consumer Price Index Versus Old-age Dependency Rmentioning

confidence: 96%

“…Juselius and Takáts (2016) obtain similar results by observing a stable and significant negative correlation between the share of workers and inflation. Anderson et al (2014) and Bobeica et al (2017) contradict this view by demonstrating that population aging exhibits deflationary tendencies. The former authors study the case of Japan while the latter investigate the case of the euro area.…”

Section: Related Literaturementioning

confidence: 99%

The Aging-Inflation Puzzle: On the Interplay between Aging, Inflation and Pension Systems

Härtl

Leite

2018

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. AbstractThis paper focuses on the empirically observed relationship between demographic change and inflation and explores the theoretical nature of the puzzling link between the two. It puts the existent disparate empirical findings in the literature into perspective by formalizing an overlappinggenerations (OLG) model containing many of the underlying mechanisms that link demographic change and inflation dynamics. We are the first to formally disentangle the two components of demographic change: population size and structure, and determine how they separately affect inflation. We find that changes in population size are a main driver of inflationary pressures, but changes in population structure play a fundamental role in dampening or boosting inflationary dynamics since size effects are quite stable across the several scenarios tested. The main conclusions show a negative effect of demographic change/aging on inflation. We also conclude that the introduction of a public pay-as-you-go (PAYG) pension system has a negative impact on inflation, but these effects are dampened under general equilibrium conditions and when individuals can respond to changes in their income by adapting their labor supply. A simulation of different stages of demographic change and size of pension systems is carried out for a selected sample of individual countries. Findings suggest that aging countries with generous PAYG pension systems face strong deflationary pressures while countries that face aging but with higher fertility and immigration rates, such as the US, will experience the same deflationary pressures but much later in time. These results reinforce the hypotheses that we are entering a period of stagnation and they warn policy makers about the impact of demographic change on the foreseeable effects of monetary policy.

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Is Japanâ€™s Population Aging Deflationary?

Cited by 46 publications

References 11 publications

Population Ageing and Inflation

Population Ageing and Inflation

Do demographic changes matter? A cross-country perspective

The Aging-Inflation Puzzle: On the Interplay between Aging, Inflation and Pension Systems

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