Consumption and population age structure

Solveig K. Erlandsen and Ragnar Nymoen (ragnar.nymoen@econ.uio.no)
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Solveig K. Erlandsen: Norges Bank

No 2004/22, Working Paper from Norges Bank

Abstract: In this paper the e ects 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 e ects 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 e ects on aggregate consumption. Furthermore, controlling for age structure effects stabilizes the other parameters of the consumption function and reveals significant real interest rate effects. Simulation experiments show that the numerical effect on the savings rate of age structure changes is substantial when the indirect effects via wealth and income are accounted for.

Keywords: Consumption; demography; savings; time series models; cointegration (search for similar items in EconPapers)
JEL-codes: C51 C53 E21 J10 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2004-11-26
New Economics Papers: this item is included in nep-cmp and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Consumption and population age structure (2008)
Working Paper: Consumption and population age structure (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:bno:worpap:2004_22

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