The impact of population ageing on consumption in spain: revisiting the retirement-consumption puzzle

Antonio Cutanda and Juan A. Sanchis
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Antonio Cutanda: Universidad de Valencia, Valencia, Spain
Juan A. Sanchis: Universidad de Valencia and ERICES, Valencia, Spain

No 2604, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: As the proportion of the Spanish population entering retirement continues to grow, the sustainability of the pay-as-you-go social security system is facing increasing pressure. This study examines the implications of this demographic shift on consumption patterns in Spain from 2002 to 2017, focusing specifically on the retirement consumption puzzle using data from the Survey of Households Finances (SHF). Our findings, obtained from various estimation methods, suggest that the average decline in non-durable consumption at retirement is approximately 20%. This is in line with results from other developed economies and exceeds previous estimates for Spain. However, our analysis provides inconclusive results regarding spending on food and beverages. Finally, we observe no significant differences in the responses of working individuals and retirees to changes in interest rates, which suggests that monetary policy does not necessarily have to be adjusted due to the fact that the population is ageing.

Keywords: Consumer spending; Panel data; Regression discontinuity; Instrumental variables; Intertemporal Substitution for consumption (search for similar items in EconPapers)
JEL-codes: C23 C26 D12 D15 E21 J26 (search for similar items in EconPapers)
Date: 2026-04
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