Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/163190
Authors: 
Yoshino, Naoyuki
Miyamoto, Hiroaki
Year of Publication: 
2017
Series/Report no.: 
ADBI Working Paper Series 691
Abstract: 
This paper studies how an aging population affects economic performance and the effectiveness of fiscal and monetary policies. We develop a New Keynesian dynamic stochastic general equilibrium model with heterogeneous households, workers, and retirees. We demonstrate that an increase in the proportion of working population increases aggregate output, consumption, and investment by increasing total labor supply in the long run. It also increases wages and reduces social security burden of the government. This paper also finds that effectiveness of fiscal and monetary policies is weakened when the proportion of retirees becomes larger. This is the reason why recent monetary policies cannot recover the Japanese economy from the prolonged stagnation.
Subjects: 
Economics
Social development and protection
Japan
JEL: 
E52
E62
J11
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/3.0/igo/
Document Type: 
Working Paper

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