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The demographic transition can affect the equilibrium real interest rate through three channels. An increase in longevity - or expectations thereof - puts downward pressure on the real interest rate, as agents build up their savings in anticipation of a longer retirement period. A reduction in...
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natural rate to a fertility shock crucially depends on the preference parameter determining how households weight generations … of different size. Estimating a medium-scale model of the US-economy featuring fertility shocks, I find that declining …
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