The Young, the Old, and the Restless: Demographics and Business Cycle Volatility
Nir Jaimovich and Henry E. Siu
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| Article Citation |
Jaimovich, Nir, and Henry E. Siu. 2009. "The Young, the Old, and the Restless: Demographics and Business Cycle Volatility." American Economic Review, 99(3): 804–26.
DOI:10.1257/aer.99.3.804
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| Abstract |
We investigate the consequences of demographic change for business cycle
analysis. We find that changes in the age composition of the labor force account
for a significant fraction of the variation in cyclical volatility observed in the
G7. Since World War II, these countries have experienced dramatic demographic
changes, although details regarding timing and nature differ across
countries. We exploit this variation to show that the workforce age composition
has a large and significant effect on cyclical volatility. We relate our results to
the recent decline in US macroeconomic volatility, finding that demographic
change accounts for approximately one-fifth to one-third of this moderation.
(JEL E32, J11)
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| Article Full-Text Access |
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| Additional Materials |
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| Authors |
Jaimovich, Nir (Stanford U)
Siu, Henry E. (U British Columbia)
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| JEL Classifications |
E32: Business Fluctuations; Cycles
J11: Demographic Trends and Forecasts; General Migration
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