This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

Age Structure and the Impact of Monetary Policy

  • John V. Leahy
  • Aditi Thapar
American Economic Journal: Macroeconomics
vol. 14, no. 4, October 2022
(pp. 136-73)
Download Full Text PDF

Abstract

We exploit cross-sectional variation in the response of US states to an identified monetary policy shock to study how the impact of monetary policy varies with the age structure of the population. We find that the economy's response is weaker the greater the share of population under 35 years of age and stronger the greater the share between 40 and 65. We find that all age groups become more responsive to monetary policy shocks when the proportion of the middle-aged increases. We provide evidence consistent with middle-aged entrepreneurs starting and expanding businesses in response to an expansionary monetary shock.

Citation

Leahy, John V., and Aditi Thapar. 2022. "Age Structure and the Impact of Monetary Policy." American Economic Journal: Macroeconomics, 14 (4): 136-73. DOI: 10.1257/mac.20190337

Additional Materials

JEL Classification

  • E23 Macroeconomics: Production
  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
  • E32 Business Fluctuations; Cycles
  • E43 Interest Rates: Determination, Term Structure, and Effects
  • E52 Monetary Policy
  • J11 Demographic Trends, Macroeconomic Effects, and Forecasts
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
There are no comments for this article.
Login to Comment