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Commentary Open Access
Volume 2 | Issue 1 | DOI: https://doi.org/10.46439/aging.2.009

The ambiguous effects of population aging on macroeconomic stability: A cross-country analysis

  • 1Economics Department, Universidade Federal da Bahia, Salvador, Brazil
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Corresponding Author

Gisele Ferreira Tiryaki, gtiryaki@ufba.br

Received Date: February 15, 2021

Accepted Date: May 03, 2021

Abstract

While a vast literature has shown that population aging reduces productivity and slows down economic growth, the evidence on the impact of aging on business cycles’ volatility is scarce. Population aging compromises the effectiveness of fiscal and monetary policy and affects the labor market’s dynamics, which may lead to increased macroeconomic volatility. However, economic agents’ behavioral changes due to increased longevity may produce more stable business cycles. Building on a previous study, this article shows that while output volatility grows as the population ages, consumption and investment volatility drops. This seemingly contradictory result arises because of the impact of aging on the labor market’s dynamics.

Keywords

Business cycles, Population aging, Demographics

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