Economic Consequences of Population Aging in Japan: Effects Through Changes in Demand Structure

Katagiri, Mitsuru

doi:10.1142/s0217590818420067

Cited by 21 publications

(21 citation statements)

References 14 publications

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“…He finds that such demand shocks caused around 0.3 percentage point deflationary pressure on year-to-year inflation from the early 1990s to the 2000s in Japan. Katagiri (2012) shows that the repetition of such upward revisions made those effects look more persistent.…”

Section: Related Literaturementioning

confidence: 97%

“…Using a deterministic lifecycle economic model with capital, Bullard et al (2012) find that the optimal inflation rates suggest that aging population structures like those in Japan may contribute to observed low rates of inflation or even deflation. Katagiri (2012) investigates the effects of changes in demand structure caused by population aging on the Japanese economy using a multi-sector Keynesian model with job creation/destruction. He finds that such demand shocks caused around 0.3 percentage point deflationary pressure on year-to-year inflation from the early 1990s to the 2000s in Japan.…”

Section: Related Literaturementioning

confidence: 99%

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Demography and Inflation: An International Study

Andrews

Oberoi

Wirjanto

et al. 2018

North American Actuarial Journal

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Section: Related Literaturementioning

confidence: 97%

Section: Related Literaturementioning

confidence: 99%

Demography and Inflation: An International Study

Andrews

Oberoi

Wirjanto

et al. 2018

North American Actuarial Journal

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“…An increased life expectancy of retirees makes them more capable of re-accumulating assets after an unexpected capital stock shock, and therefore limits the welfare improving scope of a defined benefit pension fund. Lastly, we find a trade-off between slow and speedy closure of the Carvalho et al (2016) and Kara and von Thadden (2016), while Katagiri (2012) focuses on output, deflation, and unemployment. Fujiwara and Teranishi (2008) pay attention to the asymmetric effects of monetary policy on workers and retirees.…”

Section: Introductionmentioning

confidence: 79%

Pension Fund Restoration Policy in General Equilibrium

Kastelein

2016

SSRN Journal

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This paper quantifies the business cycle effects and distributional implications of pension fund restoration policy after the economy has been hit by a financial shock. We extend a canonical New-Keynesian dynamic general equilibrium model with a tractable demographic structure and a pension fund. Numerical simulations show that economies with pension funds that primarily write off accumulated pension wealth to restore financial adequacy behave similarly to an economy without a pension fund. Significant deviations from laissez-faire arise when the pension fund increases the pension fund contribution rate to close the funding gap or postpones the closure of the funding gap. At a cost of significantly distorting aggregate labour supply and output, the pension fund can shelter the group of retirees from unanticipated shocks by guaranteeing the value of their accumulated pension wealth. A defined benefit pension fund can be welfare improving to the group of agents that is already born in the period the financial shock hits. However, since pension funding gaps are typically closed over an extended period of time, a part of the welfare gains to currently alive agents comes at the expense of future, currently unborn, generations.JEL classification: J32, E32, D91, E21

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“…These deflationary tendencies stem from a decline in growth, falling land prices, and dis-savings by the elderly, which puts a downward pressure on asset prices. Katagiri (2012) investigates the impact of changes in demand structure due to aging in Japan and concludes that these shocks cause deflationary pressures.…”

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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Economic Consequences of Population Aging in Japan: Effects Through Changes in Demand Structure

Cited by 21 publications

References 14 publications

Demography and Inflation: An International Study

Demography and Inflation: An International Study

Pension Fund Restoration Policy in General Equilibrium

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

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