Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212416 
Year of Publication: 
2018
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 8/2018
Publisher: 
Bank of Finland, Helsinki
Abstract: 
Demographic shifts, such as population ageing, have been suggested as possible explanations for the recent decade-long spell of low inflation. We identify age structure effects on inflation from cross-country variation in a panel of 22 countries from 1870 to 2016 that includes standard monetary factors. We document a robust relationship that is in line with the lifecycle hypothesis: a larger share of dependent population is inflationary, whereas a larger share of working age population is disinflationary. This relationship accounts for the bulk of trend inflation, for instance, about 7 percentage points of US disinflation since the 1980s. It predicts rising inflation over the coming decades.
JEL: 
E31
E52
J11
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-220-4
Document Type: 
Working Paper

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