Aging and deflation from a fiscal perspective

Mitsuru Katagiri, Hideki Konishi, Kozo Ueda*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

10 Citations (Scopus)


Negative correlations between inflation and aging are observed across developed nations. To understand such correlations from a politico-economic perspective, we embed the fiscal theory of the price level into an overlapping-generations model, with short-lived governments choosing tax rates and bond issues. Aging is deflationary when caused by an increase in longevity but inflationary when caused by a decline in birth rate. Over the past 40 years, aging has generated non-negligible deflationary pressure in Japan. Our analysis sheds new light on the controversy over the burden of national debt and the commitment effect of strategic debt creation.

Original languageEnglish
Pages (from-to)1-15
Number of pages15
JournalJournal of Monetary Economics
Publication statusPublished - 2020 May


  • Deflation
  • Fiscal theory of the price level
  • Politico-economic equilibrium

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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