Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/193677 
Year of Publication: 
2019
Series/Report no.: 
Arbeitspapier No. 03/2019
Publisher: 
Sachverständigenrat zur Begutachtung der Gesamtwirtschaftlichen Entwicklung, Wiesbaden
Abstract: 
Population growth rates have fallen considerably in most developed countries. An important question for monetary policy is whether this has led to a fall in the natural rate of interest. In representative agent models, the response of the natural rate to a fertility shock crucially depends on the preference parameter determining how households weight generations of different size. Estimating a medium-scale model of the US-economy featuring fertility shocks, I find that declining population growth has lowered both the natural rate and inflation by about 0.4 percentage points in recent decades.
Subjects: 
inflation
business cycles
monetary policy
natural rate of interest
demographic transition
JEL: 
D64
D91
E31
E32
E52
J11
Document Type: 
Working Paper

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