Population ageing and inflation with endogenous money creation

Igor Fedotenkov

Research in Economics, 2018, vol. 72, issue 3, 392-403

Abstract: This paper models a mechanism through which population ageing may induce a deflationary process. We propose an overlapping-generations model (OLG) with money created by credits (inside money) and intergenerational trade. The model links demographic factors, such as fertility rates and longevity, to prices. We show that lower fertility rates lead to smaller demand for credit and lower money creation, which in turn cause a decline in prices. Changes in longevity affect prices through real savings and the capital market. Furthermore, a few links between interest rates and inflation are addressed; they arise in the general equilibrium and are not thoroughly discussed in literature. Long-run results are derived analytically; short-run dynamics are simulated numerically.

Keywords: Population ageing; Inflation; OLG Model; Inside money; Credits (search for similar items in EconPapers)
JEL-codes: E12 E21 E31 E41 J10 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1090944318301200
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Population ageing and inflation with endogenous money creation (2016)
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:eee:reecon:v:72:y:2018:i:3:p:392-403

DOI: 10.1016/j.rie.2018.07.004

Access Statistics for this article

Research in Economics is currently edited by Federico Etro

More articles in Research in Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().