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ResearchPaper
2016

Population growth, saving, interest rates and stagnation : discussing the Eggertsson-Mehrotra model

Abstract (English)

Post Keynesian stagnation theory argues that slower population growth dampens consumption and investment. A New Keynesian OLG model derives an unemployment equilibrium due to a negative natural rate in a three-generations credit contract framework. Besides deleveraging or rising inequality, also a shrinking population is a triggering factor. In all cases, a saving surplus drives real interest rates down. In other OLG settings however, with bonds as stores of value, slower population growth, on the contrary, causes a lack of saving and thus rising rates. Moreover, the recent fall in market interest rates was brought about by monetary factors.

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Publication series

Hohenheim discussion papers in business, economics and social sciences; 2016,04

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Faculty
Faculty of Business, Economics and Social Sciences
Institute
Institute of Economics

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Language
English

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Classification (DDC)
330 Economics

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BibTeX

@techreport{Spahn2016, url = {https://hohpublica.uni-hohenheim.de/handle/123456789/6015}, author = {Spahn, Peter}, title = {Population growth, saving, interest rates and stagnation : discussing the Eggertsson-Mehrotra model}, year = {2016}, school = {Universität Hohenheim}, series = {Hohenheim discussion papers in business, economics and social sciences}, }