June 2021 issue contents
Population Aging and the Macroeconomy

Noëmie Lisack,a Rana Sajedi,b and Gregory Thwaitesc


We quantify the impact of demographic change on real interest rates, house prices, and household debt in an overlapping-generations model. Falling birth and death rates across advanced economies can explain much of the observed fall in real interest rates and the rise in house prices and household debt. Since households maintain relatively high wealth levels throughout retirement, these trends will persist as population aging continues. Countries aging relatively slowly, such as the United States, will increasingly accumulate net foreign liabilities. The availability of housing as an alternative store of value attenuates these trends, while raising the retirement age has limited effects.

JEL Code: E21, E43, E13, J11.

Full article (PDF, 38 pages, 2.9 mb)
Online appendix (PDF, 17 pages, 2.7 mb)

a  Banque de France
b  Bank of England
c  University of Nottingham