Is the amplitude of the cycle related with demography?

Societies all around the world are facing a demographic phenomenon called population ageing. This change in population’s age composition has an enormous impact on the economic activity, and as a result it also affects the amplitude of the business cycle. These differences on the amplitude of the business cycles may occur through different channels, such as changes in labor productivity, changes in risk aversion level, and through shifts on the economic activity from the industry sector to the services sector for example. The change in economic activity also implies different levels of exposure and sensitivity to international economic shocks, which should correspondingly result in consumption patterns. Since not all the forces exert pressure on volatility in a similar way, it is viable to proceed with an empirical test in order to analyze the effect of population ageing on the volatility of the cycle. The empirical strategy followed by in Guimarães and Tiryaki (2020), is here used and expanded. Some differences to point out is that the share of older population is here further divided in two sub-groups as their economic behavior and effect on economic activity varies. A sample of 30 European countries and 4 emerging economies are studied and based on the data, is plausible to infer that population ageing have a negative impact on the cyclical volatility of output, consumption, and investment.