Eurozone’s ageing is lowering interest rates – BoI paper

europe-iw

A working paper published by the Bank of Italy studies the possible macroeconomic impacts of the ageing of the eurozone’s population.

In Demographics and the natural real interest rate: historical and projected paths for the euro area, Andrea Papetti uses a large-scale overlapping generation model.

Papetti calculates the eurozone’s natural real interest rate, the real return on capital that would theoretically bring economic output in line with its potential.

He finds that demographic factors

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