C. van Ewijk
- Will ageing lead to a higher real exchange rate for the Netherlands?
- Number of pages
- Den Haag: CPB
- CPB Discussion paper
- Volume | Edition (Serie)
- Document type
- Working paper
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
Long-term projections for the Netherlands indicate that demand for nontradables - e.g. health
care services - will increase relative to supply due to population ageing. If this leads to higher
future real exchanges rates this will erode the return of the savings currently made to prepare
for ageing. This paper explores the magnitude of potential price effects using a modified version
of the ‘two country, four commodity framework’ developed by Obstfeld and Rogoff (2005) to
explore the exchange rate effects of the balance of payments reversal in the US. When these price
effects are substantial, this may have serious consequences for policies to enhance national
saving in the Netherlands.
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