Fiscal and Monetary Responses to the Demographic Change in Germany

Fiscal and Monetary Responses to the Demographic Change in Germany | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Fiscal and Monetary Responses to the Demographic Change in Germany Stefan Dürmeier This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4986150/v2 This work is licensed under a CC BY 4.0 License Status: Posted Version 2 posted You are reading this latest preprint version Show more versions Abstract The analysis compares the Fiscal Theory of the Price Level with public bond purchases by the central bank in face of the demographic development in Germany. In order to account for both the diminishing population growth and an aging society, a heterogeneous agent model in a life- cycle economy is applied. When the demographic trends projected for 2025 to 2080 are fed into the model, the application of the FTPL shows rising sovereign debt, higher tax income as well as higher precautionary savings after the year 2030. Total output and inflation remain largely unaffected. When Quantitative Easing programs are evaluated, the estimation yields dynamics that are considerably below the long run values for most of the macroeconomic aggregates. Output drops from 2025 on and inflation is subdued. JEL Codes: C630, E52, E62, J110 Macroeconomics Demographic Change Life-Cycle Economy Policy Rules Fiscal Theory of the Price Level Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 2 posted You are reading this latest preprint version Show more versions Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-4986150","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":346574216,"identity":"5dfa3778-1874-44fc-902e-8554d4267886","order_by":0,"name":"Stefan Dürmeier","email":"data:image/png;base64,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","orcid":"https://orcid.org/0009-0004-4743-8058","institution":"","correspondingAuthor":true,"prefix":"","firstName":"Stefan","middleName":"","lastName":"Dürmeier","suffix":""}],"badges":[],"createdAt":"2024-08-27 17:11:50","currentVersionCode":2,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-4986150/v2","doiUrl":"https://doi.org/10.21203/rs.3.rs-4986150/v2","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":99317798,"identity":"98f2ca15-016a-40e9-966e-29a4d0e63fd2","added_by":"auto","created_at":"2025-12-31 16:30:43","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":696418,"visible":true,"origin":"","legend":"","description":"","filename":"PaperDemographics.pdf","url":"https://assets-eu.researchsquare.com/files/rs-4986150/v2_covered_c9b602c0-da32-416a-abbf-f8aae7d0e127.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"Fiscal and Monetary Responses to the Demographic Change in Germany","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Demographic Change, Life-Cycle Economy, Policy Rules, Fiscal Theory of the Price Level","lastPublishedDoi":"10.21203/rs.3.rs-4986150/v2","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-4986150/v2","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThe analysis compares the Fiscal Theory of the Price Level with public bond purchases by the\u003c/p\u003e\n\u003cp\u003ecentral bank in face of the demographic development in Germany. 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