Aging, Output Per Capita and Secular Stagnation
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.
We thank INET for financial support and Daron Acemoglu and Pascual Restrepo for generously sharing their data with us. We also thank Oded Galor for many useful comments and Ian Tarr for excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Gauti B. Eggertsson & Manuel Lancastre & Lawrence H. Summers, 2019. "Aging, Output Per Capita, and Secular Stagnation," American Economic Review: Insights, vol 1(3), pages 325-342. citation courtesy of