Ingenue, A Multi-Regional Overlapping Generations Model

This paper presents a multi-regional overlapping generations model built to study the effects mid to long run demographic dynamics on savings and international financial flows.The world is divided into six regions presenting contrasted demographical evolutions. In each region, the behavior of 15 concurrent generations is described. The model computes optimal saving and consumption for individuals representative of each generation and the unique interest rate implied by free movement of capital. The demographical projections of the UN are taken as exogenous and the model is calibrated to represent stylized facts about economies at the end of the XXth century.Simulation over 50 periods are computed using the Newton method for the stacked model as provided by TROLL.The paper discusses issues in building a large overlapping generations model using a scripting language such as Perl or Python. in writing the models to present it as a system of simple recursive equations, in finding initial values for the iterative solution method, and in imposing liquidity constraints. It presents suggestions on improving TROLL for the treatment of such models and concludes on some first findings about the size of international capital flows which could be expected from projected demographical evolutions.