I had the opportunity earlier this week to sit down with the IIEA and Dan O’Brien to discuss the decline in global birth rates, population ageing and what it all means. Thanks to the IIEA for hosting me.
Read MoreI have a few things on my mind this week. We have to talk about Japan and the BOJ. Last week’s decision by the BOJ to raise its deposit rate above zero for the first time in 17 years cements Japan and its central bank as a counter cyclical indicator, of sorts. While major central banks have spent the majority of the past 18 months raising interest rates, the BOJ has stubbornly resisted calls to exit NIRP, despite rising inflation. Now that the ECB, BOE and Fed are on the cusp of lowering interest rates, the BOJ is pulling the trigger on a hike. The BOJ’s decision raises a number of fundamental questions for global macro traders and thinkers. The most obvious one is whether the twin inflation shock from Covid and shifting geopolitics is now pulling major developed rate markets out of their ZIRP/NIRP funk. And if they are, does this mean that the idea of long-term gravity of rapidly ageing population weighing on inflation and interest rates is wrong? Is Japanification now reversing? I am sceptical, but if Japan manages to escape, it would go a long way to falsify the idea of a determinist link between ageing and disinflation.
Read MoreThis is the final chapter in the first part of my long-running demographics project. In the previous chapter I described the quantum effect of fertility, which hypothesises a negative relationship between fertility and rising incomes as parents substitute quantity for quality in their reproductive decisions and child-rearing. But can the quantum effect explain why birth rates in one country after the other appears to be stuck below the replacement level, and why global fertility will soon drop below that same level? The answer is no.
To understand current and more recent post WWII global fertility trends—broadly since the 1970s—we need to introduce tempo effects to the analysis. Tempo effects describe the tendency of women to postpone the timing of their first child. By mathematical logic, prolonged tempo effects can drive significant population ageing, but a more fundamental question is whether birth postponement also has a lagged effect on quantum, or more precisely, cohort fertility. This chapter discusses these question in the context of the hypothesis of a Second Demographic Transition, SDT, and presents a number of case studies to explore the specifics of recent fertility trends in key countries and regions. The chapter finishes by discussing the idea of a fertility trap, and whether the increasingly accelerating decline in global birth rates are a problem, drawing on the recent polarisation in the debate on this issue.
Read MoreThis is the landing page for my most ambitious non-fiction project to date. My writings on demographics are scattered all over this blog—though my master’s thesis is a baseline for a lot of my thoughts—and so, incidentally, is the work of my late friend Edward Hugh on the same matter. Randy McDonald has been stalwartly keeping the old Demography.Matters blog up to date, an effort which is badly in need of a new more modern and well-publicised platform.
I have been thinking about and studying demographics and population dynamics for well over 10 years, and this is my attempt to synthesise my thoughts. I will warm up with a simple account of the demographic transition, posted below, before moving on to the principal components of this process; mortality and fertility. I will then, eventually, examine how demographics drive economic processes, principally via the effect of ageing on growth and capital flows, expanding on the work that I have already done. I will post this work in piecemeal fashion inviting comments as I go along before combining everything into a coherent volume. When Google first introduced its Blogger platform it did so, I believe, under the banner of perpetual beta, a spirit that I agree with. I will post a final, and fully edited, volume eventually, but I also want to draw back the curtain slowly and gradually, if only to keep up the publishing cadence on this site. The meaning of “landing page” in this context is no more than a repository for the list of references and the individual chapters, both of which will be updated here as I go along. Each chapter, however, will have its own independent permalink too.
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