Population-age ratio and monetary policy3 min read 04 Jul 2018, 09:51 PM IST
Research shows that a larger working-age population leads to lower inflation in developed economiesthere is a lesson here for India
How critical is the population-age structure of an economy to the effectiveness of monetary policy? Not very, if one were to go by the Reserve Bank of India (RBI), which, in its recent bimonthly monetary policy report, has identified six key factors that are likely to affect domestic inflation going forward. These include crude prices, global financial developments, household inflationary expectations, house rent allowance (HRA) revisions, revisions in the minimum support price (MSP), and good monsoons. However, a recent Bank for International Settlements paper by Mikael Juselius and Elod Takats, The Enduring Link Between Demography And Inflation (goo.gl/R63HKw), offers an interesting counter-perspective, at least as far as advanced economies are concerned.