Population ageing and prices in an OLG model with money created by credits
Igor Fedotenkov
MPRA Paper from University Library of Munich, Germany
Abstract:
This paper provides an explanation of why population ageing is associated with deflationary processes. For this reason, we create an overlapping-generations model (OLG) with money created by credits (inside money) and intergenerational trade. In other words, we combine a neoclassical OLG model, with post-Keynesian monetary theory. The model links demographic factors, such as fertility rates and longevity, to prices. We show that lower fertility rates lead to a smaller demand for credits, and lower money creation, which causes a decline in prices. Changes in longevity affect prices via real savings and capital market. Furthermore, we address a few links between interest rates and inflation, which arise in the general equilibrium, and are not thoroughly discussed in the literature. Long-run results are derived analytically; short-run dynamics is simulated numerically.
Keywords: Population ageing; inflation; OLG model; inside money; credits (search for similar items in EconPapers)
JEL-codes: E12 E31 J10 (search for similar items in EconPapers)
Date: 2015-07-10
New Economics Papers: this item is included in nep-age, nep-dge, nep-ger, nep-mac and nep-mon
References: Add references at CitEc
Citations:
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/66056/1/MPRA_paper_66056.pdf original version (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:pra:mprapa:66056
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter (winter@lmu.de).