Aging and deflation from a fiscal perspective

Mitsuru Katagiri, Hideki Konishi, Kozo Ueda

Research output: Contribution to journalArticle

Abstract

Negative correlations between inflation and aging are observed across developed nations. To understand such correlations from a politico-economic perspective, we embed the fiscal theory of the price level into an overlapping-generations model, with short-lived governments choosing tax rates and bond issues. Aging is deflationary when caused by an increase in longevity but inflationary when caused by a decline in birth rate. Over the past 40 years, aging has generated non-negligible deflationary pressure in Japan. Our analysis sheds new light on the controversy over the burden of national debt and the commitment effect of strategic debt creation.

Original languageEnglish
JournalJournal of Monetary Economics
DOIs
Publication statusPublished - 2019 Jan 1

Fingerprint

Fiscal
Deflation
National debt
Fiscal theory of the price level
Economics
Government
Burden
Debt
Inflation
Japan
Birth rate
Overlapping generations model
Tax rate

Keywords

  • Deflation
  • Fiscal theory of the price level
  • Politico-economic equilibrium

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this

Aging and deflation from a fiscal perspective. / Katagiri, Mitsuru; Konishi, Hideki; Ueda, Kozo.

In: Journal of Monetary Economics, 01.01.2019.

Research output: Contribution to journalArticle

@article{986701ad4ae94fd4b6e17ae014457a47,
title = "Aging and deflation from a fiscal perspective",
abstract = "Negative correlations between inflation and aging are observed across developed nations. To understand such correlations from a politico-economic perspective, we embed the fiscal theory of the price level into an overlapping-generations model, with short-lived governments choosing tax rates and bond issues. Aging is deflationary when caused by an increase in longevity but inflationary when caused by a decline in birth rate. Over the past 40 years, aging has generated non-negligible deflationary pressure in Japan. Our analysis sheds new light on the controversy over the burden of national debt and the commitment effect of strategic debt creation.",
keywords = "Deflation, Fiscal theory of the price level, Politico-economic equilibrium",
author = "Mitsuru Katagiri and Hideki Konishi and Kozo Ueda",
year = "2019",
month = "1",
day = "1",
doi = "10.1016/j.jmoneco.2019.01.018",
language = "English",
journal = "Journal of Monetary Economics",
issn = "0304-3932",
publisher = "Elsevier",

}

TY - JOUR

T1 - Aging and deflation from a fiscal perspective

AU - Katagiri, Mitsuru

AU - Konishi, Hideki

AU - Ueda, Kozo

PY - 2019/1/1

Y1 - 2019/1/1

N2 - Negative correlations between inflation and aging are observed across developed nations. To understand such correlations from a politico-economic perspective, we embed the fiscal theory of the price level into an overlapping-generations model, with short-lived governments choosing tax rates and bond issues. Aging is deflationary when caused by an increase in longevity but inflationary when caused by a decline in birth rate. Over the past 40 years, aging has generated non-negligible deflationary pressure in Japan. Our analysis sheds new light on the controversy over the burden of national debt and the commitment effect of strategic debt creation.

AB - Negative correlations between inflation and aging are observed across developed nations. To understand such correlations from a politico-economic perspective, we embed the fiscal theory of the price level into an overlapping-generations model, with short-lived governments choosing tax rates and bond issues. Aging is deflationary when caused by an increase in longevity but inflationary when caused by a decline in birth rate. Over the past 40 years, aging has generated non-negligible deflationary pressure in Japan. Our analysis sheds new light on the controversy over the burden of national debt and the commitment effect of strategic debt creation.

KW - Deflation

KW - Fiscal theory of the price level

KW - Politico-economic equilibrium

UR - http://www.scopus.com/inward/record.url?scp=85061591123&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85061591123&partnerID=8YFLogxK

U2 - 10.1016/j.jmoneco.2019.01.018

DO - 10.1016/j.jmoneco.2019.01.018

M3 - Article

AN - SCOPUS:85061591123

JO - Journal of Monetary Economics

JF - Journal of Monetary Economics

SN - 0304-3932

ER -