On secular stagnation and low interest rates: demography matters

Stefano Neri, Giuseppe Ferrero and Marco Gross ()
Additional contact information
Marco Gross: European Central Bank

No 1137, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Nominal and real interest rates in advanced economies have been decreasing since the mid-1980s and reached historical lows in the aftermath of the global financial crisis. Understanding why interest rates have fallen is essential for both monetary policy and financial stability. This paper focuses on one of the factors put forward in the literature within the secular stagnation view: adverse demographic developments. The main conclusion that we draw from the empirical analysis is that these developments have exerted downward pressure on real short- and long-term interest rates in the euro area over the past decade. Moreover, building on the European Commission’s projections for dependency ratios until 2025, we illustrate that the foreseen changes in the age structure of the population may dampen economic growth and continue exerting downward pressure on real interest rates in the future.

Keywords: secular stagnation; demographic developments; real interest rates; monetary policy (search for similar items in EconPapers)
JEL-codes: C32 E52 J11 (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-age, nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://www.bancaditalia.it/pubblicazioni/temi-disc ... 137/en_tema_1137.pdf (application/pdf)

Related works:
Journal Article: On secular stagnation and low interest rates: Demography matters (2019)
Working Paper: On secular stagnation and low interest rates: demography matters (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1137_17

Access Statistics for this paper

More papers in Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area Contact information at EDIRC.
Bibliographic data for series maintained by ().