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Financing Consumption in an Aging Japan: The Role of Foreign Capital Inflows in Immigration


  • Robert Dekle


We project the impact of demographic change on Japanese capital flows by simulating the impact of population aging on Japanese saving and investment rates. As aging depresses saving rates, in our baseline projections, we show that by 2015, foreign capital inflows will comprise about 15 percent of Japanese output. A distinguishing feature of this paper is that we compare the capital flows that occur without immigration to the capital inflows that would occur with immigration of 400,000 people annually. With the larger labor force from immigration and the larger induced capital accumulation, output will be 22 percent higher by 2020, and 50 percent higher by 2040. The higher output means that less capital needs to be imported; by 2015, Japan will be importing only 8 percent of its output.

Suggested Citation

  • Robert Dekle, 2004. "Financing Consumption in an Aging Japan: The Role of Foreign Capital Inflows in Immigration," NBER Working Papers 10781, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:10781
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    Cited by:

    1. Shimasawa, Manabu & Oguro, Kazumasa, 2010. "Impact of immigration on the Japanese economy: A multi-country simulation model," Journal of the Japanese and International Economies, Elsevier, vol. 24(4), pages 586-602, December.
    2. Kim, Soyoung & Lee, Jong-Wha, 2008. "Demographic changes, saving, and current account: An analysis based on a panel VAR model," Japan and the World Economy, Elsevier, vol. 20(2), pages 236-256, March.
    3. Yamamura, Eiji, 2011. "Frequency of contact with foreigners in a homogeneous society: perceived consequences of foreigner increases," MPRA Paper 33852, University Library of Munich, Germany.
    4. Antonio Golini & Anna Di Bartolomeo, 2009. "The impact of a massive migration flow on the regional population structure: The case of Italy," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 7(1), pages 149-165.

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    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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