The Impact of Demographics on Inflation in Thailand
Recently, Thailand has simultaneously experienced low inflation rate and aging population. Is there a linkage between these two variables as questioned by policy makers and researchers in many countries? The lower working age population and a higher aged people ratio could theoretically change economic agent’s behaviors such as consumption, saving, and others affecting to the macro-level economy and inflation pressures. This paper, hence, tries to find the impact of demographic change on inflation in Thailand from an empirical view. Based on the overall CPI basket and its subcomponents over the sample period 2001 to 2016, the results show that, in general, a declining Thai working age population has a significant deflationary impact. In contrast, in the case of housing and furnishing inflation, the results suggest an inflationary pressure. The findings support the view that demographics are one of the structural factors that alter the economic contexts and have implications on macroeconomic policies in Thailand.
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