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Title:Consumption and population age structure PDF Logo
Authors:Erlandsen, Solveig
Nymoen, Ragnar
Issue Date:2004
Series/Report no.:Memorandum, Department of Economics, University of Oslo 2004,27
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.
Subjects:Consumption
demography
savings
time series models
cointegration
JEL:C51
C53
E21
J10
Document Type:Working Paper
Appears in Collections:Memorandum, Department of Economics, University of Oslo

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