Working Paper Series, Department of Economics, Uppsala University
No 2004:13:
Estimating the Relationship between Age Structure and GDP in the OECD Using Panel Cointegration Methods
Pär Österholm ()
Abstract: Economic theory suggests that variations in countries’ age
structure should affect the economy on an aggregate level. This paper
investigates the relationship between age structure and GDP in 20 OECD
countries using annual data from 1970 to 1999. Using new methodology, the
relationship between the variables can be formulated in levels despite the
presence of unit roots in the time series. Applying two panel cointegration
tests proposed by Pedroni (1995, 1997a, 1999), support is found for a long
run relationship between GDP and the number of people in five different age
groups. Coefficient estimates from panel regressions support effects in
line with the life cycle hypothesis and human capital theory; children and
retirees are found to have a negative or relatively smaller positive effect
on GDP than productive age groups.
Keywords: Age structure; GDP; Panel cointegration; (follow links to similar papers)
JEL-Codes: C23; J10; (follow links to similar papers)
32 pages, September 7, 2004
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