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Consumption and population age structure
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DOI：10.1007/s00148-006-0088-5.png)
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In this paper, the effects on aggregate consumption of changes in the age distribution of the population are analysed empirically. Economic theories predict that age influences individuals' saving and consumption behaviour. Despite this, age structure effects are rarely controlled for in empirical consumption functions. Our findings suggest that they should. By analysing Norwegian quarterly time series data, we find that changes in the age distribution of the population have significant and life-cycle-consistent effects on aggregate consumption. Furthermore, controlling for age structure effects stabilises the other parameters of the consumption function and reveals significant real interest rate effects.
Keyword:
consumption
demography
cointegration
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