Demographic Effects on Prices: Is Aging Deflationary?

Tomoki Isa
Additional contact information
Tomoki Isa: Visiting Scholar, Policy Research Institute, Ministry of Finance Japan.

Discussion papers from Policy Research Institute, Ministry of Finance Japan

Abstract: Although the Bank of Japan has continued unconventional monetary easing over the years, it is still far from achieving the inflation target set by the central bank. On the back of this, there has been a growing interest in the relationship between demography and inflation, a relationship which conventional macroeconomics has not discussed much. Analyzing Japanese prefectural panel data, this paper examines demographic effects on inflation with linear regression based on the Phillips curve with some demographic variables. The result shows that the aging population has inflationary pressure on prices, while the declining population has deflationary pressure. The aging population also reduces the impact of population change and economic variation on prices, flattening the Phillips curve. As a result, this paper clarifies a multifaceted relationship between demography and inflation, suggesting that demography is not the main cause of deflation and low inflation in Japan.

Keywords: inflation; deflation; Philipps curve; monetary policy; demography; aging population; population decline; old-age dependency ratio; Japanese economy (search for similar items in EconPapers)
JEL-codes: C33 E31 E52 J11 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2021-07
New Economics Papers: this item is included in nep-age, nep-ban, nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mof.go.jp/pri/research/discussion_paper/ron342.pdf First version, 2016 (application/pdf)

Related works:
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:mof:wpaper:ron342

Access Statistics for this paper

More papers in Discussion papers from Policy Research Institute, Ministry of Finance Japan Contact information at EDIRC.
Bibliographic data for series maintained by Policy Research Institute ().