“Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“A full-throated defense of economic dynamism.” - The Wall Street Journal
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
AI Summary.Global fertility is likely below the replacement level needed to keep population constant in the long run, though population momentum from large cohorts of women now having children means world population will keep growing for roughly another 30 years. Unless trends change, it is projected to peak near 9bn around 2056 and then decline.
Jesús Fernández-Villaverde and Patrick NorrickUniversity of Pennsylvania
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The UN appears to systematically overestimate births; e.g. 33 of 37 countries with high-quality statistics registered fewer births in 2024 than the UN had forecast. Fernández-Villaverde and Norrick infer humanity is below replacement fertility in 2026.
Will world population keep growing even as fertility falls below replacement?
Core argument: As of 2026, humanity is likely to be below replacement fertility, with fewer births than needed to keep population constant in the long run.
In Table A1 we compare the World Population Prospects (WPP) estimates of births in 2022-2023 with the official numbers reported by several countries. [A2 shows the full sample with the deviations.] As of 2026, humanity is likely to be below the replacement fertility level: we are having fewer births than we need to keep population constant in the long run. This astonishing fact does not mean that population has stopped growing. Because of momentum effects (the large cohorts of women born two or three decades ago are having their children now, and their own parents have not died yet), world population will keep growing for another 30 years or so. But unless trends change, it will peak at roughly 9 billion around 2056 and then start falling, first slowly, then fast.
Takeaways by Macro Roundup® AI
As of 2026, humanity is likely to be below replacement fertility, with fewer births than needed to keep population constant in the long run.
World population is set to keep growing for roughly another 30 years because of momentum effects, as large cohorts of women born two or three decades ago have their children while their own parents are still alive.
Unless trends change, world population will peak at roughly 9 billion around 2056 and then start falling, first slowly, then fast.
Related Articles:
The Demographic Future of Humanity: Facts and Consequences— The authors estimate the world total fertility rate is around 2.17, below the global replacement rate of roughly 2.21, meaning humanity is already below replacement, with fertility and births falling faster than anticipated. They project middle-income countries' fertility may fall below that of rich countries outside East Asia, with emigration compounding population decline.
Depopulation Globally and in the Asia-Pacific: The Shape of Things to Come— Population aging and fertility below replacement levels are connected to a revolution in family structure in which families grow smaller, fewer people marry, and voluntary childlessness becomes common across countries. As a result, families become less able to bear the demands that may be placed on them.
The Wealth of Working Nations— Because of population aging, growth in GDP per capita and GDP per working-age adult have diverged across advanced economies; from 1998 to 2019 Japan's accumulated growth per working-age adult was 31.9% versus 29.5% in the US. The authors find a standard neoclassical growth model calibrated to each country's working-age population tracks output per working-age adult in most economies.
AI Summary.Immigration from Asia and Latin America has been the chief driver of rising US diversity and the declining non-Hispanic White share of the population. Intermarriage across racial and ethnic lines is far more common among Hispanic and Asian Americans, and rising among Black and non-Hispanic White Americans, leaving more people outside single racial categories.
Justin FoxBloomberg
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Less than half of Americans < 29 years old are non-Hispanic whites. As of 2020, 33.8mm Americans – 10.2% of the population – identify as being of two or more races, largely driven by intermarriage between whites and either Hispanics or Asian Americans.
Are immigration and intermarriage making single racial categories obsolete?
Core argument: Immigration from Asia and Latin America since the 1960s has been the chief driver of rising U.S. diversity and the declining non-Hispanic White share of the population.
The increase in immigration from Asia and Latin America since the 1960s has been the chief driver of the rise in diversity and decline in the non-Hispanic White share of the population. But those immigrants have been doing what generations of immigrants before them did and, well, becoming Americans. Marriages across racial and ethnic lines are much more prevalent among Hispanic and Asian Americans than Black or non-Hispanic White Americans, while intermarriage rates have been rising steadily for the latter two groups, too. As a result, a growing share of Americans just isn’t going to fit neatly into any single racial or ethnic category that the US government can come up with.
Takeaways by Macro Roundup® AI
Immigration from Asia and Latin America since the 1960s has been the chief driver of rising U.S. diversity and the declining non-Hispanic White share of the population.
Intermarriage across racial and ethnic lines is much more prevalent among Hispanic and Asian Americans than among Black or non-Hispanic White Americans, though rates have been rising steadily for the latter two groups as well.
A growing share of Americans does not fit neatly into any single racial or ethnic category the U.S. government defines, as recent immigrants follow earlier generations in becoming Americans.
Related Articles:
Do Adults Have the Skills They Need to Thrive in a Changing World?— An international assessment of adult skills describes numeracy proficiency levels ranging from counting objects and adding small whole numbers at the lowest level, to extracting information from tables and graphs and performing basic arithmetic with money and percentages at Level 1, up to analysing complex mathematical information and critically evaluating whether data support a claim at Level 5.
Do Past Wealth Gaps Explain Modern Inequality? Evidence From Immigration To The United States— Historical records indicate immigrants arriving in the United States around the turn of the twentieth century came with almost no wealth, and by 1920 nearly half of white adults were foreign-born or had foreign-born parents. Households of Southern or Eastern European ancestry, who arrived later with fewer resources, are on average wealthier than those of Northwestern European ancestry.
America’s Immigration Mess: An Illustrated Guide— Current Population Survey estimates indicate America's foreign-born population surpassed 50m for the first time and exceeded 15% of the national population, above the prior peak of 14.8% recorded in 1890. Mass immigration during that earlier wave was associated in contemporary opinion with widening income and wealth gaps and depressed wages for less-skilled native-born men, and sweeping national restrictions followed.
AI Summary.The surge of baby boomers, women, and immigrants entering the US labor force between 1960 and 1980 was difficult for the economy to absorb, and young workers' wages fell sharply after peaking in the early 1970s. The author argues those entrants kept occupying jobs and suppressing demand for new workers until retirement.
Steven RugglesProceedings of the National Academy of Sciences
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Accounting for both inflows and the overhang of previous labor market entrants, Ruggles predicts a labor shortage such that “Americans born in the 2020s might be the first cohort in a half century that earns significantly more than their parents did.”
How does a large influx of workers affect young workers' wages?
Core argument: Wages for young U.S. workers declined sharply after peaking in 1973, as the economy struggled to absorb the influx of workers entering the labor force between 1960 and 1980 from the baby-boom cohort, rising female participation, and increased immigration.
Figure 3A highlights the influx of workers that occurred between 1960 and 1980, as the large baby-boom cohort entered the labor force, female labor-force participation expanded, and immigration rose [see Figure 2 for a detailed breakdown]. It was difficult for the economy to absorb all the new workers, and wages for young people declined sharply after peaking in 1973. Figure 3A does not, however, provide a valid measure of labor-market competition because the baby boomers and newly employed women and immigrants did not suddenly vanish after they entered the labor force; they kept working and occupying jobs until they eventually retired decades later. The glut of workers entering the labor force in the 1970s would continue to stifle demand for new workers until their eventual exit from the labor force, a process that is still in progress. The index of employment competition shown in Figure 3B is [a better] measure of relative cohort size than 3A. It represents the cumulative net labor-market entries over the previous five decades as a % of the working-age population in the current decade. As shown in Figure 1C, we are already seeing signs of an uptick in the wages of young workers, and as the demographic shortage accelerates we may finally see real wages of the young exceed the levels of the early 1970s.
Takeaways by Macro Roundup® AI
Wages for young U.S. workers declined sharply after peaking in 1973, as the economy struggled to absorb the influx of workers entering the labor force between 1960 and 1980 from the baby-boom cohort, rising female participation, and increased immigration.
Decennial labor-force entries alone misstate labor-market competition, because baby boomers, newly employed women, and immigrants kept occupying jobs and stifling demand for new workers until their retirements, a process still in progress.
An index of employment competition measuring cumulative net labor-market entries over the previous five decades as a percentage of the current decade's working-age population is offered as a better gauge of relative cohort size, with young workers' wages already showing an uptick.
Related Articles:
Baby Busts and Growth Booms: Demographic Change and the Macroeconomy— A 1pp lower birth rate 20 years earlier is associated with 22 log points higher output per worker 20 years later and 29 log points higher after 40 years, about 0.73pp faster annual growth. The authors find lower birth rates are also associated with more labor-saving patents, larger high-tech shares, and higher productivity growth.
Technology and the Baby Bust Paradox— Aging populations create structural incentives to automate, and the argument is that demographic change could become one of the strongest long-run drivers of artificial intelligence deployment. Technology-producing economies may benefit twice, offsetting their own labor shortages while exporting automation, robotics, and AI to other aging societies.
Can A Depopulating America Still Flourish?— US labor force participation among women aged 25-54 has reached all-time highs, exceeding its previous 1999 peak, yet remains over 4 points below Europe's level and nearly 6 points below Japan's. About 3.5m prime-age American women are neither working nor looking for work, without children at home or husbands, compared with roughly 7m such men.
AI Summary.A 1pp lower birth rate 20 years earlier is associated with 22 log points higher output per worker 20 years later and 29 log points higher after 40 years, about 0.73pp faster annual growth. The authors find lower birth rates are also associated with more labor-saving patents, larger high-tech shares, and higher productivity growth.
Daron Acemoglu, David Autor, Keelan Beirne and Andrew ScottNational Bureau of Economic Research
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Cross-country evidence from 1950 to 2020 shows that a 1pp lower birth rate is associated with 22 log points (~25%) higher GDP per worker 40 years later and 29 log points (~44%) after 60 years, likely driven by labor-saving technical change.
Do lower birth rates raise output per worker decades later?
Core argument: A 1pp lower birth rate 20 years earlier is associated with 22 log points higher GDP per worker at t+20 and 29 log points by t+40, roughly 0.73 percentage points faster annual growth over the 40-year interval.
Figure 3 traces out how GDP per worker evolves following a 1pp increase in birth rates at t−20. Since cohorts born at t−20 (e.g., 1970) do not enter the working-age population until t = 0 (e.g., 1990), we should observe no response before t = 0; [indeed] the estimated coefficients are ~0 and statistically insignificant before t = 0. Beginning at t = 0, however, higher birth rates are associated with lower GDP per worker, and the negative effects grow progressively larger over time. For example, a 1pp lower birth rate at t−20 is associated with 22 log points higher GDP per worker at t+20 and 29 log points higher by t+40. The latter corresponds to roughly 0.73 percentage points faster annual growth over the 40-year interval. We find that lower birth rates are associated with more labor-saving patents and a growing share of high-tech industries across countries and US commuting zones [Figure 11]. They are also predictive of higher TFP growth across countries and US industries and increased patenting in ICT and broader automation technology classes. Using cross-country variation in WWII-era military and civilian deaths, we present suggestive evidence that the positive growth effects of falling birth rates are primarily driven by the scarcity of younger workers rather than by reductions in population per se [Figure 14]. [Editor’s note: the paper does not grapple with the fiscal consequences of an aging population.]
Takeaways by Macro Roundup® AI
A 1pp lower birth rate 20 years earlier is associated with 22 log points higher GDP per worker at t+20 and 29 log points by t+40, roughly 0.73 percentage points faster annual growth over the 40-year interval.
Estimated coefficients for GDP per worker are near zero and statistically insignificant before affected cohorts enter the working-age population at t = 0.
Lower birth rates are associated with more labor-saving patents, a growing high-tech industry share across countries and US commuting zones, higher TFP growth, and more ICT and automation patenting, with WWII-era death variation offering suggestive evidence that scarcity of younger workers, rather than smaller population, drives the growth effects.
Related Articles:
Can A Depopulating America Still Flourish?— US labor force participation among women aged 25-54 has reached all-time highs, exceeding its previous 1999 peak, yet remains over 4 points below Europe's level and nearly 6 points below Japan's. About 3.5m prime-age American women are neither working nor looking for work, without children at home or husbands, compared with roughly 7m such men.
Capital Is Making a Comeback— Tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private gross domestic product, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%. The author argues demand for tangible capital investment will now have to rise.
America Is Missing The New Labor Economy – Robotics Part 1— Building an identical robotic arm in the US costs about 2.2x more than in China, and US-labeled components still depend heavily on Chinese parts and materials with no scalable alternative. The author argues China is the only country positioned to capture full-scale intelligent robotic automation, which would let it outcompete the US across production.
AI Summary.Census Bureau microdata analysis finds that in Illinois annual out-migration by households earning under $50K fell by 104K while out-migration by households earning over $200K rose by 54K. Across the Midwest, adults with a bachelor's degree or higher now make up 57% of out-migrants, up from around 40%.
Aziz SunderjiHome Economics
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The “Brain Drain” is ongoing in the Midwest. The fraction of adult out-migrants with at least a bachelor’s degree is now 57%, up from ~40% in 2005. “It’s the most educated and highest-earning that are still leaving in droves.”
Are the most educated and highest-earning residents leaving the Midwest?
Core argument: Annual out-migration by Illinois households earning over $200K rose by 54K between 2014–15 and 2023–24, according to the author's analysis of Census Bureau microdata.
Take Illinois, the most populous Midwestern state: my analysis of Census Bureau microdata shows that between 2014–15 and 2023–24, annual out-migration by households earning under $50K fell by 104K. Out-migration by Illinois households earning over $200K rose by 54K over the same period. Across the region, the trend along educational lines is the same: the bachelor’s-or-higher share of adult out-migrants is now 57%, up from around 40% in 2005. It’s the most educated and highest-earning that are still leaving in droves.
Takeaways by Macro Roundup® AI
Annual out-migration by Illinois households earning over $200K rose by 54K between 2014–15 and 2023–24, according to the author's analysis of Census Bureau microdata.
Annual out-migration by Illinois households earning under $50K fell by 104K between 2014–15 and 2023–24, according to the author's analysis of Census Bureau microdata.
Adults with a bachelor's degree or higher make up 57% of out-migrants from the Midwest, up from around 40% in 2005.
Related Articles:
Housing and the American Worker— Wages net of housing costs were once substantially higher in high-density areas than low-density areas for workers both with and without college education, but over the past half-century that urban wage premium has persisted only for college-educated workers, not for those with a high school degree or less.
Where is Standard of Living the Highest? Local Prices and the Geography of Consumption— The authors estimate that geographical differences in cost of living are especially large for low-income US households, and that expensive cities offer college graduates a standard of living similar to affordable cities while offering less-educated households a lower one. A high school dropout household moving from the most affordable to the most expensive commuting zone would see consumption fall 18.5%.
The Determinants Of Declining Internal Migration— A 10% increase in wages where people live is associated with 3.5% less migration, while a 10% increase in destination wages is associated with 7.8% more migration; a 10% rise in destination home prices is associated with 2.6% less migration. The authors find wage responses alone would have raised migration rates, but housing-related factors more than offset them.
AI Summary.American workers over 50 earned roughly 35% more per week than workers under 30 in the late 1970s, a gap that widened to about 55% at its early-2010s peak before narrowing to 47%. Their advantage in access to top-quarter-paying management jobs also widened, from about 5 to 8.3 percentage points.
Nicola Bianchi and Matteo ParadisiAspen Economic Strategy Group
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In the late 1970s, US workers over 50 earned ~35% more per week than those under 30. By 2024, older workers earned ~47% more. Longer working lives and entrenchment in managerial positions decreased opportunities for younger workers.
How has the pay gap between older and younger workers changed?
Core argument: U.S. workers over 50 earned 47% more per week than workers under 30 in 2024, down from a peak of about 55% in the early 2010s but up from roughly 35% in the late 1970s.
In the late 1970s, workers over 50 earned roughly 35% more per week than workers under 30. Over the following four decades, this gap widened steadily, reaching a peak in the early 2010s, when older workers earned about 55% more. It has narrowed somewhat in the last decade, as the oldest baby boomers have begun to retire and leave the very top of the wage distribution, but even in 2024, older workers still earned 47% more per week than younger workers on average. And because working lives are now longer, with many employees remaining in senior roles well into their late sixties, there is little reason to expect this pay gap to return to the more modest levels observed in the 1970s without intervention from firms or policymakers. Older workers have pulled further ahead of younger workers in access to desirable, higher-paying managerial jobs, as displayed in figure 4. In the mid-1970s, workers over 50 were about 5 percentage points more likely than workers under 30 to be employed in management occupations in the top quarter of the wage distribution. By 2024, this gap had widened to almost 8.3 percentage points. Over the same period, these higher-paying managerial roles grew from just over 5% to a little more than 7% of full-time private-sector jobs.
Takeaways by Macro Roundup® AI
U.S. workers over 50 earned 47% more per week than workers under 30 in 2024, down from a peak of about 55% in the early 2010s but up from roughly 35% in the late 1970s.
The gap between workers over 50 and workers under 30 in holding management jobs in the top quarter of the wage distribution widened from about 5 percentage points in the mid-1970s to almost 8.3 percentage points by 2024.
Higher-paying managerial roles grew from just over 5% to a little more than 7% of full-time private-sector jobs between the mid-1970s and 2024, while longer working lives leave little reason to expect the age pay gap to return to 1970s levels without action by firms or policymakers.
Related Articles:
Countries for Old Men: An Analysis of the Age Pay Gap— Administrative data on 38mm Italian and German workers show wages of older workers grew much faster than those of younger workers, a widening age pay gap the authors also find in fourteen other high-income countries. The authors argue workforce aging leaves fewer top hierarchy slots for younger workers, slowing promotions.
Changes in Milestones of Adulthood— Among US young adults aged 25–34, the share completing a high school or college degree rose 9 percentage points to 83%, while the share ever married fell 18 points to 44% and the share living with a child fell 16 points to 39%. Economic milestones became more common as family formation milestones became less common.
Zero-Sum Thinking and the Roots of U.S. Political Divides— Zero-sum thinking — viewing gains for one group as losses for another — is associated with greater support for liberal economic policies, stronger alignment with the Democratic Party, and weaker alignment with the Republican Party. The authors also find it linked to believing the QAnon conspiracy theory holds some truth and to sympathy for the attack on the U.S. Capitol.
AI Summary.Modeling of a rise in the total fertility rate from one to two finds it takes 41 years before the ratio of labor income to consumption needs across age groups exceeds its starting level. The authors argue this delay makes pro-natalist policies economically unappealing to older voters and short-horizon politicians.
David WeilJournal of Economic Perspectives
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David Weil finds that it takes 41 years after a rise in the fertility rate for the “support ratio” to rise above its initial value, allowing for increased consumption – an “unfortunate implication for pro-natalist policies” at the political level.
How long does a fertility increase take to raise living standards?
Core argument: A rise in the total fertility rate from one to two takes 41 years from its onset before the adjusted support ratio rises above its initial value.
A rising working-age share acts like a tailwind allowing consumption per capita. This has an unfortunate implication for pro-natalist policies. This is shown in the dashed line in Figure 3, which traces out the dynamics following a rise in the total fertility rate from one to two. It takes 41 years from the onset of the fertility increase for the adjusted support ratio (the weighted sum of population by age group, where the weights are average labor income by age, divided by a similar sum where the weights are average consumption by age) to rise above its initial value. Conceptually, the adjusted support ratio functions just as the working-age share of the population in the simple calculations above: The larger its value, the higher consumption will be relative to the earnings of working-age adults. The existence of this demographic debit suggests that policies designed to raise fertility would not be appealing (at least on economic grounds) to elderly or near elderly voters, and would similarly be an unappetizing choice for politicians whose planning horizon rarely extends so far into the future.
Takeaways by Macro Roundup® AI
A rise in the total fertility rate from one to two takes 41 years from its onset before the adjusted support ratio rises above its initial value.
The adjusted support ratio — population by age weighted by average labor income, divided by a similar sum weighted by average consumption by age — functions like the working-age share, with higher values permitting higher consumption relative to working-age earnings.
This demographic debit suggests policies designed to raise fertility would not appeal, at least on economic grounds, to elderly or near-elderly voters, nor to politicians whose planning horizons rarely extend so far into the future.
Related Articles:
The Demographic Outlook: 2026 to 2056— The Congressional Budget Office projects the US population rises from 349m to 364m between 2026 and 2056, with annual growth slowing from 0.3% over the next decade to 0.1% thereafter before reaching zero and then shrinking. Declining fertility is projected to push deaths above births starting in 2030, increasingly offsetting net immigration.
The Case for Gradual Population Decline— South Korea's fertility rate fell below 1.7 in 1985 and its share of population aged 20-40 has fallen 20% since 2000, yet it ranked first in Bloomberg's Innovation Index and twelfth in a global soft power ranking. The author argues low fertility does not inevitably cause technological and cultural stagnation.
The US Has One of the Highest Fertility Rates Among Peer Countries— The tempo-adjusted fertility rate, which accounts for shifts in the timing of births, shows the US rate falling since roughly 2009-10 and dropping below the 2.1 births-per-woman replacement level around 2017, reaching 1.82 in 2022. The US decline is less severe than in many peer countries.
AI Summary.The authors estimate that demand for assets has outpaced supply by roughly 400% of GDP versus 100%, making rising asset demand the leading contributor to falling interest rates. They project that debt sustainability requires fiscal consolidation exceeding 10% of GDP, though debt could reach 250% of GDP without raising interest rates.
Adrien Auclert, Hannes Malmberg, Matthew Rognlie, and Ludwig StraubFederal Reserve Bank of Kansas City
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U.S. asset supply as a % of GDP doubled since 1982, but asset demand – driven by aging, rising inequality, increasing foreign desire for U.S. assets, and falling productivity growth – grew by 4x GDP. “Asset demand won the race, and interest rates fell.”
Has rising asset demand outpaced supply enough to drive interest rates down?
Core argument: Since the early 1980s, asset demand has risen by roughly 400% of GDP against a cumulative asset supply increase of about 100% of GDP, with demand winning the race and interest rates falling.
From 1950 to the present, rapid population aging, rising income inequality, increasing foreign demand for U.S. assets, and declining productivity growth all contributed to a surge in asset demand. Asset supply initially fell, then turned around sharply, mainly driven by increases in government debt and the value of capitalized profits. Overall, asset demand won the race, and interest rates fell. In the left panel, we see that asset supply and demand shifts, shown as shares of GDP, remain small until the late 1960s; then, asset supply declines through the early 1980s. Since then, both have risen dramatically, though asset demand has outpaced supply, rising by ~ 400% of GDP relative to a cumulative asset supply increase of only around 100% of GDP. [The 2nd and 3rd panels] use our recovered supply and demand shifts to decompose equilibrium movements in r∗ and A/Y. Falling asset supply is mostly responsible for the reductions in r∗ and A/Y early on. [Since] the 1980s, rising asset demand has been the leading contributor to the decline in interest rates and the rise in A/Y. Looking ahead, debt sustainability requires a fiscal consolidation of >10% of GDP, but debt could reach 250% of GDP without pushing up interest rates.
Takeaways by Macro Roundup® AI
Since the early 1980s, asset demand has risen by roughly 400% of GDP against a cumulative asset supply increase of about 100% of GDP, with demand winning the race and interest rates falling.
Population aging, rising income inequality, growing foreign demand for U.S. assets, and declining productivity growth contributed to the surge in asset demand, while asset supply rose mainly on higher government debt and the value of capitalized profits.
Falling asset supply accounts for most of the early declines in r* and the asset-to-output ratio, while rising asset demand has led the decline in interest rates since the 1980s; debt sustainability requires a fiscal consolidation exceeding 10% of GDP.
Related Articles:
Demographics, Wealth, and Global Imbalances in the Twenty-First Century— Because the elderly hold much more wealth than the young and on average do not draw it down much as they age, the authors' model projects no "great demographic reversal": population aging is estimated to push global rates of return down by about 1.07pp and raise global wealth from 456% to 498% of world GDP.
Underlying Trends in the U.S. Neutral Interest Rate— An analysis attributes the pre-pandemic decline in the U.S. neutral real interest rate to international factors and population aging, with fiscal spending pushing rates up; since 2019 international factors have instead put upward pressure on U.S. real rates. The estimates suggest productivity growth has played a very minor role.
Foreign Flows Into The US At Record High— Foreign net inflows into long-term US assets, measured as a rolling 12-month sum, are at record highs, with equities showing particularly strong inflows. Flows into other asset classes are weaker but show no sign of an exodus from US assets.
