Many countries will be confronted with ageing populations in the coming decades. This will crucially affect the economic outlook for the economy. Population changes directly affect the size of the labour force and consequently potential employment and output growth. In addition, changes in demographic trends strongly influence savings and investment behaviour, the outlook for the public finances, a range of financial market variables and, more controversially, may impact on the pace of productivity growth in an economy. Because the timing and magnitude of demographic changes varies significantly across regions, international capital flows will play an important role for the allocation of investment. This book offers a comprehensive treatment of ageing related issues based on a five region overlapping generations model and provides a quantitative assessment until 2050.

Many countries will be confronted with ageing populations in the coming decades. This will crucially affect the economic outlook for the economy. Population changes directly affect the size of the labour force and consequently potential employment and output growth. Because the timing and magnitude of demographic changes varies significantly across regions, international capital flows will play an important role for the allocation of investment. This book offers a comprehensive treatment of ageing related issues based on a five region overlapping generations model and provides a quantitative assessment until 2050.

We identify a crucial difference between the backward-ooking and forward-looking Phillips curve concerning the real output effects of monetary policy shocks. The backward-ooking Phillips curve predicts a strict intertemporal trade-off in the case of monetary shocks: a positive short-run response of output is followed by a period in which output is below baseline and the cumulative output effect is exactly zero. In contrast, the forward-looking model implies a positive cumulative output effect. The empirical evidence on the cumulated output effects of money is consistent with the forward-looking model. We also use this method to determine the degree of forward-looking price setting.