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Demographics, retirement age, and real interest rates in Poland

Jan Acedański () and Julia Włodarczyk
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Jan Acedański: University of Economics in Katowice
Julia Włodarczyk: University of Economics in Katowice

Central European Journal of Economic Modelling and Econometrics, 2018, vol. 10, issue 4, 355-385

Abstract: Changes in the size and the age structure of a population have a great impact on an economy, especially on national savings and capital flows. Poland's population, although still relatively young when compared to other developed countries, is expected to experience accelerated ageing and decline in forthcoming decades. In this paper, we assess the effects of these processes for Polish economy. Using an open-economy OLG model with demographic shocks and a variable retirement age, we simulate dynamics of real interest rates, main macro aggregates as well as net foreign assets to GDP. We show that rapid ageing will reduce the interest rate gap between Poland and the developed countries by 1.3-2 p.p. We also document a strong positive relationship between interest rates and retirement age and find that the decline in the interest rate in Poland is primarily driven by the surviving probability shock.

Keywords: demographic transition; ageing; old-age dependency ratio; real interest rates; economic growth (search for similar items in EconPapers)
JEL-codes: E43 F41 J11 J26 (search for similar items in EconPapers)
Date: 2018
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