The macroeconomic impact of the baby boom generation

McMillan, Henry; Baesel, Jerome B.

doi:10.1016/0164-0704(90)90028-9

Cited by 54 publications

(27 citation statements)

References 11 publications

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“…A stable correlation between inflation and the age distribution of the population has been uncovered in empirical data for the OECD countries (Lindh andMalmberg, 1998, 2000), for the United States (McMillan and Baesel, 1990) and Australia (Lenehan, 1996). In the latter two papers GDP growth is also shown to be correlated with the age structure.…”

Section: Introductionmentioning

confidence: 89%

Medium‐term forecasts of potential GDP and inflation using age structure information

Lindh

2004

Journal of Forecasting

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Economic behaviour as well as economic resources of individuals vary with age. Swedish time series show that the age structure contains information correlated to medium-term trends in growth and inflation. GDP gaps estimated by age structure regressions are closely related to conventional measures. Monetary policy is believed to affect inflation with a lag of 1 or 2 years. Projections of the population's age structure are comparatively reliable several years ahead and provide additional information to improve on 3-5 years-ahead forecasts of potential GDP and inflation. Thus there is a potential scope for using age structure based forecasts as an aid to monetary policy formation. Copyright © 2004 John Wiley & Sons, Ltd.

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Section: Introductionmentioning

confidence: 89%

Medium‐term forecasts of potential GDP and inflation using age structure information

Lindh

2004

Journal of Forecasting

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“…According to this theory, using data from the United States McMillan and Baesel (1990) predicted the moderation of inflation in the 1990s and confirmed the forecasting power of demographics for low-frequency inflation. They showed the positive inflationary impact coming from the dependents.…”

Section: Literature Reviewmentioning

confidence: 99%

Population Ageing and Inflation

Broniatowska

2017

Population Ageing

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Recently a view has emerged in the literature that low inflation may also be influenced, among other variables, by demography. However, there is little empirical evidence for this hypothesis. The motivation of this paper is to assess whether inflation is linked to the population age structure, and especially whether an increased old-age dependency ratio is correlated with a lower inflation rate. To check this hypothesis, a panel data model is used. The model is estimated for 32 OECD member economies over the period from 1971 to 2015. We regress the changes in consumer price inflation on a set of macroeconomic variables. The results of the estimations suggest that there is a relation between demography and low-frequency inflation. A larger old-age dependency ratio is indeed correlated with lower inflation. Therefore, ongoing population ageing may exert downward pressure on inflation. This confirms some of the previous empirical findings that ageing is deflationary when related to increased life expectancy.

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“…4 Similar to the 'dependency ratio', this age structure variable is expected to be a life cycle saving measure. As suggested by McMillan and Baesel (1990), the ratio of 'prime-savers aged' persons to the rest of the adult population may be a closer approximation to the life cycle ideal than the 'dependency ratio'. The 'prime-savers' are assumed to be of middle-age, and have relatively high earnings at the same time as the size of their households, and hence their needs, are smaller than when they were younger, and they are prone to start saving to secure quality of life after retirement.…”

Section: Age Structure Effects On Consumptionmentioning

confidence: 99%

“…Among the age structure variables, the 'dependency ratio', defined as the number of children and retired persons to those of working age, is often used to represent changes in the age structure. 3 In this paper we use a somewhat different age structure variable, namely the number of persons in the 'prime-saver' age group to the rest of the adult population, suggested and used by McMillan and Baesel (1990). 4 Similar to the 'dependency ratio', this age structure variable is expected to be a life cycle saving measure.…”

Section: Age Structure Effects On Consumptionmentioning

confidence: 99%

Consumption and population age structure

Erlandsen¹,

Nymoen

2006

J Popul Econ

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In this paper the effects on aggregate consumption of changes in the age distribution of the population are analysed empirically. Economic theories predict that age influences individuals' saving and consumption behaviour. Despite this, age structure effects are rarely controlled for in empirical consumption functions. Our findings suggest that they should. By analysing Norwegian quarterly time series data we find that changes in the age distribution of the population have significant and life cycle consistent effects on aggregate consumption. Furthermore, controlling for age structure effects stabilizes the other parameters of the consumption function and reveals significant real interest rate effects.

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The macroeconomic impact of the baby boom generation

Cited by 54 publications

References 11 publications

Medium‐term forecasts of potential GDP and inflation using age structure information

Medium‐term forecasts of potential GDP and inflation using age structure information

Population Ageing and Inflation

Consumption and population age structure

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