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Retirement Savings Policy by Michael P. Barry

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Chapter 28 The Great Transition

The demographic trends we reviewed in Chapter 27 are having a profound effect on our economy.

We discussed the effect on interest rates in that chapter. But consider also, and obviously, the effect on GDP. Again, because productivity is the issue, the correlation is with working age population. And as Figure 27.3 showed, the rate of growth of world working age population (ages 15–64) peaked around 1980 (together with interest rates) and has been declining, precipitously, since then.

The worldwide population boom fueled a growth economy, reflected in a growing GDP. And it spawned economic theories—on the left(ish) Keynesianism and on the right(ish) supply-side economics—and deficit spending policies to go with it. ...

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