Aging, Output Per Capita and Secular Stagnation — by Gauti B. Eggertsson, Manuel Lancastre, Lawrence H. Summers

Aging, Output Per Capita and Secular Stagnation — by Gauti B. Eggertsson, Manuel Lancastre, Lawrence H. Summers

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Aging, Output Per Capita and Secular Stagnation

NBER Working Paper No. 24902
Issued in August 2018
NBER Program(s):Economic Fluctuations and Growth, Monetary Economics

This paper re-examines the relationship between population aging and economic growth. We confirm previous research such as Cutler, Poterba, Sheiner, and Summers (1990) and Acemoglu and Restrepo (2017) that show positive correlation between measures of 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 an effective lower bound on nominal rates as took place 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.

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Document Object Identifier (DOI): 10.3386/w24902

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