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How much can demographic changes account for trends in the U.S. economy? This paper shows that a heterogeneous-agent, overlapping-generations model with historical demographic flows can generate several features of the U.S. economy over the past several decades, including a secular decline in economic growth, a rise in savings relative to GDP, a corresponding decline in real interest rates, and, in part, changes in wealth inequality. Simulations show that education and immigration contributed to these trends, but the main driver was an aging of the U.S. population driven by declining birth rates and increased life expectancy. Counterfactual analysis shows that increased immigration can improve near-term economic growth (total and per capita) and offset some aging of the population. However, there is little that realistic policy intervention can do to offset these trends in the long-run.
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