American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Aging, Output Per Capita, and Secular Stagnation
American Economic Review: Insights
vol. 1,
no. 3, December 2019
(pp. 325–42)
Abstract
This paper re-examines the relationship between population aging and economic growth. We confirm previous research such as Cutler et al. (1990) and Acemoglu and Restrepo (2017) that show positive correlation between population aging and per capita output growth. Our contribution is demonstrating that this relationship breaks down when the adjustment of interest rates is inhibited by a lower bound on nominal rates, as during the Great Financial Crisis decade. Indeed, during the "secular stagnation regime" of 2008–2015 that prevailed in a number of countries, aging had a negative impact on living standards, consistent with the secular stagnation hypothesis.Citation
Eggertsson, Gauti B., Manuel Lancastre, and Lawrence H. Summers. 2019. "Aging, Output Per Capita, and Secular Stagnation." American Economic Review: Insights, 1 (3): 325–42. DOI: 10.1257/aeri.20180383Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- E32 Business Fluctuations; Cycles
- E43 Interest Rates: Determination, Term Structure, and Effects
- G01 Financial Crises
- I31 General Welfare; Well-Being
- J14 Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination