It was during that period that the resolute reversal in the Fed’s monetary policy under Paul Volcker coincided with the expansionary fiscal policy of the Reagan administration. In particular, US fiscal policy stood in marked contrast at that time with German fiscal policy, which was on a course of moderate consolidation.
That said, I believe the negative effects on the economy of a declining and aging population have been rather exaggerated. First of all, as Chart 2 shows, the contribution of the number of employed persons is not so significant; capital stock and TFP contribute more to the potential growth rate.