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Aggregate Demand Effects of Changing Population Age Structure

Aggregate Demand Effects of Changing Population Age Structure

Chapter:
(p.199) 13 Aggregate Demand Effects of Changing Population Age Structure
Source:
Birth Quake
Author(s):
Diane J. Macunovich
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226500928.003.0014

This chapter reports some of the preliminary findings on U.S. patterns of consumption and saving. The macrolevel studies find very strong and significant age structure effects on a wide range of phenomena from inflation and interest rates to housing and other durable goods expenditures. The chapter shows pronounced age effects on patterns of expenditure and saving, but it also indicates that the dependency effect dramatically changes as national per capita income rises. The overall net effect of children on savings is negative at low levels of real per capita income, but in post-WWII United States, children began to cause a reduction in overall consumption as a share of income, relative to the average, rather than an increase. Additionally, the baby boom has had a major impact on the U.S. economy. Changes in age structure would have induced swings of up to 25 percent in total consumption demand during the twentieth century.

Keywords:   consumption, saving, age structure, expenditure, United States, baby boom

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