Consumption and population age structure

Solveig Erlandsen and Ragnar Nymoen ()
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Solveig Erlandsen: Norges Bank, Postal: Bankplassen 2, P.O. Box 1179 Sentrum, N-0107 Oslo, Norway

No 27/2004, Memorandum from Oslo University, Department of Economics

Abstract: In this paper the effects 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 effects 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 effects 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: 22 pages
Date: 2005-04-06
New Economics Papers: this item is included in nep-cmp and nep-mac
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Related works:
Journal Article: Consumption and population age structure (2008)
Working Paper: Consumption and population age structure (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:osloec:2004_027

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