Impact of Demographic Changes on Inflation and the Macroeconomy

32 Pages Posted: 31 Dec 2014

See all articles by Jong-Won Yoon

Jong-Won Yoon

International Monetary Fund (IMF)

Jinill Kim

Korea University

Jungjin Lee

International Monetary Fund (IMF)

Date Written: November 2014

Abstract

The ongoing demographic changes will bring about a substantial shift in the size and theage composition of the population, which will have significant impact on the global economy. Despite potentially grave consequences, demographic changes usually do not take center stage in many macroeconomic policy discussions or debates. This paper illustrates how demographic variables move over time and analyzes how they influence macroeconomic variables such as economic growth, inflation, savings and investment, and fiscal balances, from an empirical perspective. Based on empirical findings - particularly regarding inflation - we discuss their implications on macroeconomic policies, including monetary policy. We also highlight the need to consider the interactions between population dynamics and macroeconomic variables in macroeconomic policy decisions.

Keywords: Demographic transition, Inflation, Population growth, Aging, Human fertility, Mortality, Older people, Labor supply, Monetary policy, Fiscal policy, Demographic Changes, Population Aging, Macroeconomic Impact, Savings and Investment, Fiscal Policy.

JEL Classification: J11, E31, E21

Suggested Citation

Yoon, Jong-Won and Kim, Jinill and Lee, Jungjin, Impact of Demographic Changes on Inflation and the Macroeconomy (November 2014). IMF Working Paper No. 14/210, Available at SSRN: https://ssrn.com/abstract=2544208

Jong-Won Yoon (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jinill Kim

Korea University ( email )

1 Anam-dong 5 ka
Seoul, 136-701

Jungjin Lee

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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