6  Admittedly, some new technological developments (such as digitalisation, robotics and artificial intelligence) could be a source of faster productivity growth. And plausibly, population ageing may actually promote automation. But eventually automation can only progress insofar as new ideas (so-called product innovation) emerge. Whatever the net effect on productivity, with the evidence we now have on the association between demography and growth in advanced economies in recent decades, we should not rule out the possibility that population ageing might significantly decrease potential output growth. Given population projections, extrapolating the observed association into the coming decades yields declines of output growth of about 1 percentage point (pp) until 2030, and close to 2 pp in countries where the demographic transition will accelerate in the years ahead. And recent observations on productivity growth are not very encouraging. Whatever the measurement used (either labour productivity or total factor productivity) there is a clear productivity slowdown in most advanced economies during the last two decades, even though total factor productivity growth has recovered somewhat in the last one. There is some discussion about to what extent this global productivity trend is due either to missmeasurement, to the delay in the diffusion of the new technologies and of their potential effects, or to more fundamental reasons, such as a slower innovation rate. Nevertheless, we cannot take for granted that productivity growth could compensate for the negative effects of population ageing on potential growth. 7  Population ageing may also affect trend inflation.

9  Let me now turn to the implications of demographic changes for the balance of savings and investment and, thus, for the so-called natural rate of interest, something that for obvious reasons is very closely followed by central banks. Savings are likely to increase with population ageing, as people need to devote more resources to retirement. Moreover, the demand for investment is likely to be lower as the population ages, a trend that will also be made more acute by the nature of the technological changes we are witnessing and that seem to require more intangibles and fewer traditional capital goods. No wonder that most estimates point to a significant decrease in the natural rate of interest in recent decades, one closely associated to demographics: among the main factors potentially behind the course of the natural rate (which also include technological growth and changes in risk premia), it is clearly the demographic component that accounts for its low-frequency changes. This decline in the natural real of interest has significant implications for monetary policy. A low natural real interest rate, together with the deflationary pressures associated with the same demographic and technological factors behind low interest rates, imply a higher probability of nominal policy rates hitting their effective lower bound, or alternatively the socalled reversal rate (i.e. the level below which further rate cuts may become contractionary), thus hampering the ability of conventional monetary policy to stabilise the economy.