De Economist

, Volume 160, Issue 1, pp 59–80 | Cite as

Will Ageing Lead to a Higher Real Exchange Rate for the Netherlands?

  • Casper van Ewijk
  • Maikel Volkerink
Open Access


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 (Brookings Papers Econ Activity 1:67–146, 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.


Ageing Trade balance Nontradables Real exchange rate 

JEL Classification

E60 F41 J11 


Open Access

This article is distributed under the terms of the Creative Commons Attribution Noncommercial License which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

Supplementary material

10645_2011_9182_MOESM1_ESM.docx (29 kb)
ESM 1 (DOCX 30 kb)


  1. Baldwin R., Robert-Nicoud F. (2010) Trade-in-goods and trade-in-tasks: An integrating framework. Graduate Institute University of Geneva, GenevaCrossRefGoogle Scholar
  2. Bettendorf L., van der Horst A., Draper N., van Ewijk C., de Mooij R. (2011) Ageing and the conflict of interest between generations. De Economist 159: 257–278CrossRefGoogle Scholar
  3. Börsch-Supan A. (2001) Labor market effects of population ageing NBER. Working Paper 8640. Cambridge, MA, NBERGoogle Scholar
  4. Cardi O., Restout R. (2011) Labor market frictions and the Balassa-Samuelson model. Mimeo, ParisGoogle Scholar
  5. CBS. (2009). Kerncijfers van de bevolkingsprognose, 2008–2050. Retrieved from the web (2010, July):
  6. CBS. (2010). Bestedingen; uitgebreide indeling naar huishoudkenmerken (Huurwaarde 2007). Retrieved from the web (2010, July):
  7. CBS. (2011). Nationale Rekeningen; historie. Retrieved from the web (2011-8-29):
  8. DNB. (2011). Homepage Statistieken, Tabel 12.14 Extern vermogen van Nederlands inclusief BFI’s. Retrieved from the web (2011-8-29):
  9. Eurostat. (2011). Mean consumption expenditure by age of the reference person in PPS (hbs_exp_t135). Retrieved from the web (2011-3-16):
  10. Evers M., de Mooij R., van Vuuren D. (2008) The wage elasticity of labour supply: A synthesis of emperical estimates. De Economist 156: 25–43CrossRefGoogle Scholar
  11. Hobijn B., Lagakos D. (2003) Social security and the consumer price index for the elderly. Federal Reserve Bank of New York. Current issues in Economics and Finance 9(5): 1–7Google Scholar
  12. Horvath M. (2000) Sectoral shocks and aggregate fluctuations. Journal of Monetary Economics 45: 69–106CrossRefGoogle Scholar
  13. Iscan T.B. (2009) How much can Engel’s law and Baumol’s disease explain the rise of service employment in the United States? Working Paper 2009-03, Department of Economics. Dalhousie University, HalifaxGoogle Scholar
  14. Lee D., Wolpin K. J. (2006) Intersectoral labor mobility and the growth of the service sector. Econometrica 74: 1–46CrossRefGoogle Scholar
  15. Lührmann M. (2005) Population ageing and the demand for goods and services. MEA, Universität Mannheim, MannheimGoogle Scholar
  16. Lührmann, M. (2008). Effects of population ageing on aggregated UK consumer demand. Paper presented at IFS and CEMMAP, February, 1st, London.Google Scholar
  17. Mendoza E. (1991) Real business cycles in a small open economy. American Economic Review 81: 797–818Google Scholar
  18. Obstfeld M., & Rogoff, K. (2005). The unsustainable US current account position revisited. National Bureau of Economic Research Working Paper 10869 (Revised edition November 30, 2005).Google Scholar
  19. Oosterbeek H., Webbink H. D. (1995) Enrolment in higher education in the Netherlands. De Economist 143: 367–380CrossRefGoogle Scholar
  20. Ostry J., Reinhart C. (1992) Private saving and terms of trade shocks: Evidence from developing countries. IMF Staff Papers 39: 495–517CrossRefGoogle Scholar
  21. Stockman A., Tesar L. (1995) Tastes and technology in a two-country model of the business cycle. American Economic Review 85: 168–185Google Scholar
  22. van der Horst, A., Bettendorf, L., Draper, N., van Ewijk, C., de Mooij, R., & Ter Rele, H. (2010). Vergrijzing verdeeld. Toekomst van de Nederlandse Overheidsfinanciën. CPB Bijzondere Publicatie 86. Den Haag: CPB.Google Scholar

Copyright information

© The Author(s) 2012

Authors and Affiliations

  1. 1.CPB Netherlands Bureau for Economic Policy ResearchNetspar and University of AmsterdamAmsterdamThe Netherlands
  2. 2.SEO Economic ResearchAmsterdamThe Netherlands

Personalised recommendations