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Patterns of Trade between Countries with Differing Age Compositions of Populations: An Overlapping Generations General Equilibrium Analysis

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  • Serdar Sayan

Abstract

This paper considers a two-country world where the population in one country grows faster than the other, and investigates the effects of resulting age composition differences across countries on international trade flows under alternative simulation scenarios, using an overlapping-generations general equilibrium model. The differing age compositions of populations are shown to give rise to differentials in wage rates and rentals for capital under autarky conditions. This, in turn, causes costs of production and relative prices to differ, creating the grounds for trade. After exploring the patterns of trade between the country with the relatively young and faster-growing population and the low-population growth country experiencing population aging, the paper discusses the implications of simulation results for trade between such young-population countries as Mexico and Turkey and their regional partners within NAFTA and the EU, where population aging has long set in.

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Bibliographic Info

Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2001 with number 252.

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Date of creation: 01 Apr 2001
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Handle: RePEc:sce:scecf1:252

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Web page: http://www.econometricsociety.org/conference/SCE2001/SCE2001.html
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Keywords: Trade; Economics of aging; simulation; Overlapping generations;

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Cited by:
  1. Serdar Sayan, 2002. "Dynamic Heckscher-Ohlin Results from a 2x2x2x2 Overlapping Generations Model with Unequal Population Growth Rates," Departmental Working Papers 0201, Bilkent University, Department of Economics.

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