Economic Consequences of Population Aging in Japan: Effects through Changes in Demand Structure

Mitsuru Katagiri

No 12-E-03, IMES Discussion Paper Series from Institute for Monetary and Economic Studies, Bank of Japan

Abstract: In this paper I investigate the effects of changes in demand structure caused by population aging on the Japanese economy using a multi-sector new Keynesian model with job creation/destruction. I consider upward revisions in forecast for the speed of Japanese population aging as unexpected shocks to its demand structure. I find that the shocks caused around 0.3 percent point deflationary pressure on year-to-year inflation, 0.3 to 0.4 percent point increase in unemployment rates, and 1.8 percent point decrease in real GDP from the early 1990s to the 2000s in Japan. I also find that the repetition of such upward revisions made those effects look more persistent.

Keywords: Population Aging; Matching; Productivity; Deflation (search for similar items in EconPapers)
JEL-codes: E24 E31 J11 J64 (search for similar items in EconPapers)
Date: 2012-03
New Economics Papers: this item is included in nep-age and nep-mac
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Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:ime:imedps:12-e-03

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