Businesspeople and politicians seem to be afraid that population reduction will be accompanied by economic recession. In this paper we examine the experience of some countries of various sizes in which population has been declining and observe how GDP, GDP per capita, unemployment rate, and labour force participation rate are evolving during the period that population is declining. Using the pooled mean group (PMG) estimation method, we find that population decline can go hand in hand with growing GDP and increasing per capita GDP, and at the same time the labour participation rate may increase and unemployment may fall.

This paper examines the effect of exchange rate volatility for two small countries, Croatia and Cyprus, on aggregate exports during the period of first quarter of 1990 to first quarter of 2012. It is claimed by some researchers that exchange rate volatility causes a reduction on the overall level of trade. Empirical researchers often utilize the standard deviation of the moving average of the logarithm of the exchange rate as a measure of exchange rate fluctuation. In this study, we propose a new measure for volatility. Overall, our results suggest that there is a positive effect of volatility on exports of Croatia and Cyprus.

The relationship between population growth and economic growth is examined. Evidence is provided on the direction of causality between population and GDP in five industrialized countries (US, UK, Germany, France, and Italy) for the periods 1820–1938 and 1950–2016. Using Toda-Yamamoto Granger causality tests and Sims causality test it was found that the direction of causality during the former period was from Population to GDP or bidirectional while for the latter period, it was from GDP to population. It is also shown that during the second period per capita GDP was almost double relative to the first period. We argue that the difference may be partly explained by the direction of causality between the two variables. In the 1820–1938 period, the direction of causality is probably due to the large family model that prevailed in that period that led to rapid population growth. For the 1950–2016 period it is probably the rapid economic growth that followed the Second World War and motivated large migration flows to the developed countries we examined.