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The great demographic reversal: ageing societies, waning inequality, and an inflation revival

Goodhart, C. A. E. and Pradhan, Manoj (2020) The great demographic reversal: ageing societies, waning inequality, and an inflation revival. SUERF Policy Notes (197). SUERF The European Money and Finance Forum, Vienna, AT.

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Abstract

The rise of China to the status of economic superpower has been the dominant feature of the last three decades. China’s rise, the main characteristic of globalisation, in conjunction with a beneficial sweet spot in demography, drove output up and inflation down in the advanced economies. But these trends are now reversing, and China’s greatest contribution to global growth is now past. Its working age population is now shrinking, while the ranks of the old expands, there and worldwide. This great demographic reversal will lead to a return of inflation, higher nominal interest rates, lessening inequality and higher productivity, but worsening fiscal problems, as medical, care and pension expenditures all increase in our ageing societies. Meanwhile debt has been massively accumulated, especially as a consequence of the Covid pandemic. This will make control of inflation much harder in future decades. Be warned, the future will not be at all like the past, and in many ways even more difficult to manage.

Item Type: Monograph (Report)
Official URL: https://www.suerf.org/policynotes
Additional Information: © 2020 SUERF - The European Money and Finance Forum
Divisions: Financial Markets Group
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
JEL classification: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E20 - General
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E30 - General
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General
I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets
J - Labor and Demographic Economics > J1 - Demographic Economics > J11 - Demographic Trends and Forecasts
J - Labor and Demographic Economics > J1 - Demographic Economics > J14 - Economics of the Elderly; Economics of the Handicapped
N - Economic History > N1 - Macroeconomics and Monetary Economics; Growth and Fluctuations > N10 - General, International, or Comparative
N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Income, and Wealth > N30 - Economic History: Labor and Consumers, Demography, Education, Health, Income and Wealth: General, International, or Comparative (Migration)
P - Economic Systems > P1 - Capitalist Systems > P10 - General
Date Deposited: 06 Oct 2020 14:27
Last Modified: 06 Jun 2021 18:03
URI: http://eprints.lse.ac.uk/id/eprint/106723

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