Journal Article

Aging, Deflation, and Secular Stagnation

Abstract: Prior to the COVID pandemic, industrialized countries experienced a sustained episode of low inflation, low real interest rates, and low per capita gross domestic product (GDP) growth. As the logistical and other disruptions created by the COVID pandemic fade, will industrialized economies once again face downward pressure on prices, real interest rates, and output growth? We present evidence that the aging of the population was depressing the inflation rate, as well as real interest rates and GDP growth, prior to the COVID pandemic. Aging is ongoing in industrialized countries, and it will continue to put large and steady downward pressure on prices, interest rates, and output growth in future years.

Keywords: demographics; prices; output; interest rates; economic growth; aging;

JEL Classification: E52; E62; G51; D15;

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Bibliographic Information

Provider: Federal Reserve Bank of Atlanta

Part of Series: Policy Hub

Publication Date: 2022-10-06

Volume: 2022

Issue: 13

Order Number: 2022-13