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Demographic Changes, Saving, and Current Account in East Asia

Author

Listed:
  • Soyoung Kim

    (Department of Economics, Korea University, Anam-Dong, Sungbuk-Gu, Seoul, 136-701, Republic of Korea)

  • Jong-Wha Lee

    (Department of Economics, Korea University and the Australian National University)

Abstract

This paper analyzes the empirical relationships among demographic changes, saving, and current account balances in East Asia. The panel Vector-Auto Regressive (VAR) model shows that an increase in the dependency rate, especially the elderly dependency rate, significantly lowers saving rates and subsequently worsens current account balances. The result implies that the future aging of the population in East Asia would have a significant impact on global capital flows and current account imbalances. (c) 2007 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Suggested Citation

  • Soyoung Kim & Jong-Wha Lee, 2007. "Demographic Changes, Saving, and Current Account in East Asia," Asian Economic Papers, MIT Press, vol. 6(2), pages 22-53, Spring/Su.
  • Handle: RePEc:tpr:asiaec:v:6:y:2007:i:2:p:22-53
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    Cited by:

    1. Vansteenkiste, Isabel & Nickel, Christiane, 2008. "Fiscal policies, the current account and Ricardian equivalence," Working Paper Series 935, European Central Bank.
    2. Eswar S. Prasad, 2011. "Rebalancing Growth in Asia," International Finance, Wiley Blackwell, vol. 14(1), pages 27-66, April.
    3. repec:spr:weltar:v:153:y:2017:i:4:d:10.1007_s10290-017-0283-3 is not listed on IDEAS
    4. Andrew K. Rose & Saktiandi Supaat & Jacob Braude, 2009. "Fertility and the real exchange rate," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 496-518, May.
    5. Markus Brueckner, 2016. "Consumption in Asia," CAMA Working Papers 2016-65, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    6. Graff Michael & Tang Kam Ki. & Zhang Jie, 2012. "Does Demographic Change Affect the Current Account? A Reconsideration," Global Economy Journal, De Gruyter, vol. 12(4), pages 1-26, December.
    7. Kam Ki Tang & Michael Graff & Jie Zhang, "undated". "Macroeconomic Fluctuations in Emerging Economies: An Unobserved Components Approach," MRG Discussion Paper Series 4111, School of Economics, University of Queensland, Australia.
    8. Hassan B. Ghassan & Hassan R. Al-Hajhoj & Faruk Balli, 2018. "Bi-Demographic Changes and Current Account using SVAR Modeling: Evidence from Saudi Economy," Papers 1803.11161, arXiv.org, revised Apr 2018.
    9. Tai-Kuang Ho & Kuo-Chun Yeh, 2014. "The Post-Asian Crisis Drop In Investment: The Cases Of Indonesia, Korea, Malaysia, And Thailand," Contemporary Economic Policy, Western Economic Association International, vol. 32(3), pages 618-638, July.
    10. Guonan Ma & Zhou Haiwen, 2009. "China’s evolving external wealth and rising creditor position," BIS Working Papers 286, Bank for International Settlements.
    11. Thomas A. Knetsch & Arne J. Nagengast, 2017. "Penny wise and pound foolish? On the income from Germany’s foreign investments," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(4), pages 753-778, November.

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