Shock persistence in output and the role of stochastic population growth

Abstract

This paper illustrates both analytically and empirically that stochastic long-memory in economic growth arises due to the presence of a long-memory in population growth. Specifically, we show that the long-run conditional mean and variances of economic growth are functions of stochastic long-memory in demographic system. This is well-supported by an empirical example.economy-demographic interaction, long-memory, economic growth, stochastic population, stochastic economic growth.