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Demographic Change, International Trade and Capital Flows

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  • Igor Fedotenkov
  • Bas Groezen
  • Lex Meijdam

Abstract

Trade in goods that are not perfect substitutes can considerably change the predictions of standard neoclassical models about the effects of demographic developments. This paper considers a relative decrease in the population size of one country, when countries specialize in the production of different intermediate goods. The degree of substitutability is crucial for the direction of capital flows between the countries and for the development of wages. The less those goods are substitutes, the stronger the long-run international spillover effects of a demographic shock will be. For the interest rate effects, also international differences in saving rates due to e.g., different pension schemes have to be taken into account. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Igor Fedotenkov & Bas Groezen & Lex Meijdam, 2014. "Demographic Change, International Trade and Capital Flows," Open Economies Review, Springer, vol. 25(5), pages 865-883, November.
    • Handle: RePEc:kap:openec:v:25:y:2014:i:5:p:865-883
    DOI: 10.1007/s11079-014-9311-2
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    Cited by:

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    2. Bruno Emmanuel Ongo Nkoa, 2018. "Determinants of foreign direct investment in Africa: An analysis of the impact of financial development," Economics Bulletin, AccessEcon, vol. 38(1), pages 221-233.
    3. Igor Fedotenkov, 2014. "Pension Reform, Factor Mobility and Trade with Country-Specific Goods," De Economist, Springer, vol. 162(3), pages 247-262, September.
    4. Ådne Cappelen & Torbjørn Eika, 2020. "Immigration and the Dutch disease A counterfactual analysis of the Norwegian resource boom 2004-2013," Open Economies Review, Springer, vol. 31(3), pages 669-690, July.
    5. Partha Sen & Koji Shimomura, 2017. "Convergence and Overtaking in a Dynamic two Country Model," Open Economies Review, Springer, vol. 28(1), pages 107-124, February.
    6. Igor Fedotenkov & Irena Mikolajun, 2013. "Migration and Welfare," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(1), pages 71-73, February.
    7. Fedotenkov, I., 2012. "Pensions and ageing in a globalizing world. International spillover effects via trade and factor mobility," Other publications TiSEM 8830bc21-4138-4479-8459-a, Tilburg University, School of Economics and Management.

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    More about this item

    Keywords

    International trade; Demographic shock; Overlapping generations; Pensions; Spillover effects; F41; H55; J11;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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