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Investment for the Demographic Window in Latin America

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  • Rodriguez Maria Jose

Abstract

This paper studies the behavior of investment during demographic transitions. In particular, I focus on the period where the working age to population ratio reaches its maximum, namely the demographic window. I document that in Europe, Asia, and Oceania investment rates are higher 15 years before and during the window than in other periods, whereas in Latin America they are lower. To understand the relation between investment and a demographic window, I build an overlapping generations model with demographic change and variable degree of financial openness. Within this framework, I conduct several exercises and counterfactuals involving potential drivers of the investment behavior. I find that the demographic behavior in conjunction with the region-specific financial openness can explain the main pattern of investment for the demographic window in Latin America vis-a-vis Europe and Asia.

Suggested Citation

  • Rodriguez Maria Jose, 2019. "Investment for the Demographic Window in Latin America," Working Papers 2019-15, Banco de México.
    • Handle: RePEc:bdm:wpaper:2019-15
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    References listed on IDEAS

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    Cited by:

    1. Sposi, Michael, 2022. "Demographics and the evolution of global imbalances," Journal of Monetary Economics, Elsevier, vol. 126(C), pages 1-14.

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    More about this item

    Keywords

    Investment; Demographic Window; Latin America;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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