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The role of demography on per capita output growth and saving rates


  • Miguel Sánchez Romero

    (Max Planck Institute for Demographic Research, Rostock, Germany)


Computable OLG growth models and "convergence models" differ in their assessment of the extent to which demography influences economic growth. In this paper, I show that computable OLG growth models produce results similar to those of convergence models when more detailed demographic information is used. To do so, I implement a general equilibrium overlapping generations model to explain Taiwan's economic miracle during the period 1965-2005. I find that Taiwan's demographic transition accounts for 22% of per capita output growth, 16.4% of the investment rate, and 18.5% of the savings rate for the period 1965-2005. Decomposing the demographic effect into its components, I find that fertility alone explains the impact of demographic changes in per capita output growth, while both fertility and mortality explain investment and saving rates. Assuming a small open economy, I find that investment rates increase with more rapid population growth, while saving rates follows the dependence hypothesis (Coale and Hoover, 1958). Under a closed-economy, the population growth rate has a negative influence on economic growth.

Suggested Citation

  • Miguel Sánchez Romero, 2011. "The role of demography on per capita output growth and saving rates," MPIDR Working Papers WP-2011-015, Max Planck Institute for Demographic Research, Rostock, Germany.
  • Handle: RePEc:dem:wpaper:wp-2011-015

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    References listed on IDEAS

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    Cited by:

    1. Williamson, Jeffrey G, 2013. "Demographic Dividends Revisited," CEPR Discussion Papers 9390, C.E.P.R. Discussion Papers.
    2. Lee, R., 2016. "Macroeconomics, Aging, and Growth," Handbook of the Economics of Population Aging, Elsevier.
    3. Gerlagh, Reyer & Jaimes, Richard & Motavasseli, Ali, 2017. "Global demographic change and climate policies," Discussion Paper 2017-035, Tilburg University, Center for Economic Research.
    4. repec:spr:jopoec:v:31:y:2018:i:1:d:10.1007_s00148-017-0654-z is not listed on IDEAS
    5. Lucilla Maria Bruni & Jamele Rigolini & Sara Troiano, 2016. "Forever Young?," World Bank Other Operational Studies 24996, The World Bank.
    6. Gemma Abio Roig & Concepció Patxot Cardoner & Miguel Sánchez-Romero & Guadalupe Souto Nieves, 2015. "The Welfare State and the demographic dividend: A cross-country comparison," UB Economics Working Papers 2015/332, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
    7. Nick Parr & Ross Guest, 2014. "A method for socially evaluating the effects of long-run demographic paths on living standards," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 31(11), pages 275-318, July.
    8. Miguel Sánchez Romero & Naohiro Ogawa & Rikiya Matsukura, 2013. "To give or not to give: bequest estimate and wealth impact based on a CGE model with realistic demography in Japan," MPIDR Working Papers WP-2013-012, Max Planck Institute for Demographic Research, Rostock, Germany.

    More about this item


    Taiwan; demography; economic growth;

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • Z0 - Other Special Topics - - General

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