Demographics and the natural interest rate in the euro area

• Autorzy: Marcin Bielecki , Michał Brzoza-Brzezina , Marcin Kolasa
• Języki publikacji: EN

Abstrakty

EN

We investigate the impact of demographics on the natural rate of interest (NRI) in the euro area, with a particular focus on the role played by economic openness, migrations and pension system design. To this end, we construct a life-cycle model and calibrate it to match the life-cycle profiles from HFCS data. We show that population aging contributes significantly to the decline in the NRI, explaining about two-thirds of its secular decline between 1985 and 2030. Openness to international capital ows has not been important in driving the EA real interest rate so far, but will become a significant factor preventing its further decline in the coming decades, when aging in Europe accelerates relative to the rest of the world. Of two possible pension reforms, only an increase in the retirement age can revert the downward trend on the equilibrium interest rate while a fall in the replacement rate would make its fall even deeper. The demographic pressure on the Eurozone NRI can be alleviated by increased immigration, but only to a small extent and with a substantial lag. (original abstract)

Słowa kluczowe

EN

Ageing of the population; Interest rate; Life cycles; Pension systems in the world; Life cycle model; Natural interest rate; Migration

PL

Starzenie się społeczeństw; Stopa procentowa; Cykl życia; Systemy emerytalne na świecie; Model cyklu życia; Naturalna stopa procentowa (NSP); Migracja

• Czasopismo: Collegium of Economic Analysis SGH - Working Papers
• Rocznik: 2020
• Numer: nr 50
• Strony: 38

Twórcy

autor

Marcin Bielecki

• yUniversity of Warsaw and Narodowy Bank Polski

autor

Michał Brzoza-Brzezina

• National Bank of Poland; Warsaw School of Economics

autor

Marcin Kolasa

• Warsaw School of Economics, Poland; National Bank of Poland

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