Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279566 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 16/2023
Publisher: 
Bank of Finland, Helsinki
Abstract: 
I document a statistical link between old-age dependency ratios and average markups. I propose that a mechanism whereby households develop deep habits in consumption as they age could explain this feature of the data. I show that when this mechanism is embedded in an overlapping generations New Keynesian model, the slope of the New Keynesian Phillips Curve flattens as the population ages. Further, the contractionary effects of monetary policy surprises on output are amplified. These results suggest that the challenges faced by monetary policy may become more pronounced as populations age.
Subjects: 
population aging
Phillips curve
deep habits
market power
markups
JEL: 
D11
E21
E32
E52
J11
ISBN: 
978-952-323-451-2
Document Type: 
Working Paper

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