Low interest rates due to demographic change

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Dhe low interest rate in the industrial nations has many fathers. These include demographic change, which is repeatedly named by well-known experts as the cause of the decline in interest rates in recent decades. But its meaning is not easy to assess. A new study gives an idea of ​​the dimensions in Europe.

Gerald Braunberger

The influence of aging societies on interest rates is not clear from the outset, because there are two main reasons for falling interest rates, one reason for rising interest rates. Aging and shrinking societies are accompanied by a sinking supply of labor; in particular, a few young workers who are able to increase their productivity significantly are opposed by many older workers whose productivity is unlikely to increase.

This speaks in favor of falling interest rates as well as the willingness of many still active members of the baby boomer generation to make additional savings in the face of increasing life expectancy. Most people in their last ten years of work, when mostly home ownership is paid and children are out of the house, save more of their income than in other stages of their lives. The expectation of a long retirement contributes to the propensity to save.

On the other hand, many people age to save. Instead, they dispose of existing assets – sometimes voluntarily, by wanting to treat themselves in retirement; It is because they have to dissolve savings as a result of serious illness or long-term care. This tends to increase interest rates.

. (TagsToTranslate) demographics (t) Europe

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