Looking behind the financial cycle: the neglected role of demographics

Alessandro Ferrari

No 1149, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Data demonstrate a correlation between demographic variables and financial cycle: an increase in the working-age population is associated with an expansion of the financial cycle, that is, credit growth and increased housing prices. To account for this stylized fact, this paper uses an OLG model with data on housing prices, life-cycle of income, and consumption. A transitory baby boom, which increases the working-age population, leads to higher housing prices and household borrowing.

Keywords: financial cycle; demographic trends; overlapping generations; housing (search for similar items in EconPapers)
JEL-codes: D53 E21 E32 J11 (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1149_17

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