This paper evaluates quantitatively the impact of the observed demographic transition on aggregate variables (factor prices, saving rate, output growth), and on inter-generational welfare in developing economies. It does so by developing a large-scale two-region equilibrium overlapping generations model calibrated to the North (more developed countries) and the South (less developed countries). The paper highlights that the effects of the demographic trends for less developed regions may depend on the degree of international capital mobility and on the extent to which the large Pay-As-You-Go systems in place in the more developed world will be reformed.
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Find related papers by JEL classification: E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends and Forecasts O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
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