Wealth creation, wealth dilution and demography

Brunnschweiler, Christa N. ORCID: https://orcid.org/0000-0002-8610-6433, Peretto, Pietro F. and Valente, Simone (2021) Wealth creation, wealth dilution and demography. Journal of Monetary Economics, 117. pp. 441-459. ISSN 0304-3932

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Demographic forces are crucial drivers of macroeconomic performance. Yet, existing theories do not allow demography to respond to fundamentals and policies while determining key macroeconomic variables. We build a model of endogenous interactions between fertility and innovation-led productivity growth that delivers empirically consistent co-movements of population, income and wealth. Wealth dilution and wage dynamics stabilize population through non-Malthusian forces; demography determines the ratios of labor income and consumption to financial wealth. Shocks that reduce population size, like immigration barriers, reduce permanently the labor share and the mass of firms, creating prolonged stagnation and substantial intergenerational redistribution of income and welfare.

Item Type: Article
Uncontrolled Keywords: endogenous fertility,overlapping generations,population level,r&d-based growth,wealth dilution,finance,economics and econometrics,sdg 10 - reduced inequalities ,/dk/atira/pure/subjectarea/asjc/2000/2003
Faculty \ School: Faculty of Social Sciences > School of Economics
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Depositing User: LivePure Connector
Date Deposited: 20 Feb 2020 07:58
Last Modified: 22 Oct 2022 05:52
URI: https://ueaeprints.uea.ac.uk/id/eprint/74267
DOI: 10.1016/j.jmoneco.2020.02.002

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