Macroeconomic Impacts of Aging in Japan on the Balance of Current Accounts
This paper investigates questions regarding the saving rates by age brackets and aggregate savings, and then conducts a simulation analysis of the current account, from the I-S balances of households, corporations and the government. Saving rates of the old (65 years old and above) with publicly available data are high because of a selection bias in household head, that excludes the old living with younger family members and being non-head of the household. The paper estimates the true saving rates by age brackets rather than of household head's age brackets with taking the non-head households' member into account. Estimated saving rates of the old are still positive (about 10% to 20% which are less than those of the young) even after adjusting for the bias. The impact of aging on the aggregate saving rates will not be large if the future old people continue to save as the current old people. We forecast the current account in several scenarios, using data of demographic changes, the estimated aggregate saving rates, and the estimated interest payments of government bonds. It is of our particular interest whether the current account will turn to be negative by the rapid demographic change. It is found that the IS balances would remain positive under a condition that the government bond issues would be constrained by fiscal sustainability.
|Date of creation:||Sep 2003|
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|Note:||March 2002; September 2, 2003 (Last Revised)|
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- Hayashi, Fumio & Ando, Albert & Ferris, Richard, 1988. "Life cycle and bequest savings A study of Japanese and U.S. households based on data from the 1984 NSFIE and the 1983 survey of consumer finances," Journal of the Japanese and International Economies, Elsevier, vol. 2(4), pages 450-491, December.
- Feldstein, Martin & Horioka, Charles, 1980.
"Domestic Saving and International Capital Flows,"
Royal Economic Society, vol. 90(358), pages 314-29, June.
- Ohtake, F. & Horioka, C.Y., 1995. "Saving Motives in Japan," ISER Discussion Paper 0392, Institute of Social and Economic Research, Osaka University.
- Kitamura, Yukinobu & Takayama, Noriyuki & Arita, Fumiko, 2001. "Household Savings and Wealth Distribution in Japan," Discussion Paper 38, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
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