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The Global Impact of Demographic Change

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Author Info

  • Tim Callen
  • Warwick J. McKibbin
  • Nicoletta Batini

Abstract

The world is in the midst of a major demographic transition. This paper examines the implications of such transition over the next 80 years for Japan, the United States, other industrial countries, and the developing regions of the world using a dynamic intertemporal general equilibrium four-country model containing demographics calibrated to the "medium variant" of the United Nations population projections. We find that population aging in industrial countries will reduce aggregate growth in these regions over time, but should boost growth in developing countries over the next 20-30 years, as the relative size of their workingage populations increases. Demographic change will also affect saving, investment, and capital flows, implying changes in global trade balances and asset prices. We also explore the sensitivity of the results to assumptions about future productivity growth and country external risk for the developing country region.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/9.

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Length: 36
Date of creation: 01 Jan 2006
Date of revision:
Handle: RePEc:imf:imfwpa:06/9

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Related research

Keywords: Capital flows; Aging; Savings; Economic models;

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References

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  8. Warwick J. McKibbin & David Vines, 2003. "Changes in Equity Risk Perceptions: Global Consequences and Policy Responses," Departmental Working Papers 2003-15, The Australian National University, Arndt-Corden Department of Economics.
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  20. McKibbin, Warwick J & Vines, David, 2000. "Modelling Reality: The Need for Both Inter-temporal Optimization and Stickiness in Models for Policy-Making," Oxford Review of Economic Policy, Oxford University Press, vol. 16(4), pages 106-37, Winter.
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