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The Impact of Demographics on Productivity and Inflation in Japan
Author:
Mr. Niklas J Westelius
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and
Yihan Liu
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Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 237
Language:
English
Publication Date:
08 Dec 2016
DOI:
https://doi.org/10.5089/9781475559712.001
ISBN:
9781475559712
ISSN:
1018-5941
Pages:
18
Keywords:
WP; TFP growth; Aging; Population Growth; Inflation; Productivity; depressed total factor productivity; dependency ratio; productivity gap; prefectural total factor productivity; annual total factor productivity growth; UN data; working age population; UN population statistic; Total factor productivity; Labor force participation; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Is Japan’s aging and, more recently, declining population hampering growth and reflation efforts? Exploiting demographic and economic variation in prefectural data between 1990 and 2007, we find that aging of the working age population has had a significant negative impact on total factor productivity. Moreover, prefectures that aged at a faster pace experienced lower overall inflation, while prefectures with higher population growth experienced higher inflation. The results give strong support to the notion that demographic headwinds can have a non-trivial impact on total factor productivity and deflationary pressures.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund