Demographic trends and the real interest rate

Noëmie Lisack, Rana Sajedi and Gregory Thwaites

No 701, Bank of England working papers from Bank of England

Abstract: We quantify the impact of past and future global demographic change on real interest rates, house prices and household debt in an overlapping generations model. Falling birth and death rates can explain a large part of the fall in world real interest rates and the rise in house prices and household debt since the 1980s. These trends will persist as the share of the population in the high-wealth 50+ age bracket continues to rise. As the United States ages relatively slowly, its net foreign liability position will grow. The availability of housing and debt as alternative stores of value attenuates these trends. The increasing monopolisation of the economy has ambiguous effects.

Keywords: Demographics; population ageing; neutral interest rates (search for similar items in EconPapers)
JEL-codes: E13 E21 E43 J11 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2017-12-21
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (47)

Downloads: (external link)
https://www.bankofengland.co.uk/-/media/boe/files/ ... E5038BA98C68F312A183 Full text (application/pdf)

Related works:
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:boe:boeewp:0701

Access Statistics for this paper

More papers in Bank of England working papers from Bank of England Bank of England, Threadneedle Street, London, EC2R 8AH. Contact information at EDIRC.
Bibliographic data for series maintained by Digital Media Team ().