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Asymmetric demographic pressure in South-Mediterranean versus North-Mediterranean economies and its impact on international gross capital flows

  • Peeters, Marga

According to the life-cycle theory, countries with high and rising youth ratios or high and rising old-age ratios tend to have low savings relative to investment, which depresses their capital outflows. This paper puts life-cycle theory to the test and studies the impact of demographic change on international capital flows in the Middle East and North Africa (MENA) and the Southern European countries Greece, Italy, Spain and Portugal (GISP). These two regions are asymmetric in that MENA has a young population whereas the population of GISP has been ageing rapidly. Moreover, MENA has a lower standard of living an is a much more closed economy, which may effect the ability to save and its impact on cross-border capital flows. The empirical analyses in this paper cover the period 1980-2011 and partly support the life-cycle theory for these two regions. Youth rates depressed domestic savings significantly in both the MENA and GISP regions, while ageing as well as population growth had a positive impact in the GISP region. Also, domestic savings significantly caused international capital flows.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39635.

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Date of creation: 24 Jun 2012
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Handle: RePEc:pra:mprapa:39635
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  1. Horioka, Charles Yuji & Terada-Hagiwara, Akiko, 2012. "The determinants and long-term projections of saving rates in Developing Asia," Japan and the World Economy, Elsevier, vol. 24(2), pages 128-137.
  2. Luca Marchiori, 2011. "Demographic Trends and International Capital Flows in an Integrated World," CREA Discussion Paper Series 11-05, Center for Research in Economic Analysis, University of Luxembourg.
  3. Axel Boersch-Supan & Alexander Ludwig, 2005. "Aging, pension reform, and capital flows: A multi-country simulation model," Computing in Economics and Finance 2005 123, Society for Computational Economics.
  4. Nidal R. Sabri, 2012. "INTERNATIONAL FINANCIAL INTEGRATION OF SOUTH-MEDITERRANEAN ECONOMIESA bird's-eye view," EUI-RSCAS Working Papers 33, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
  5. Narciso, Alexandre, 2010. "The impact of population ageing on international capital flows," MPRA Paper 26457, University Library of Munich, Germany.
  6. Alan M. Taylor & Jeffrey G. Williamson, 1991. "Capital Flows to the New World as an Intergenerational Transfer," NBER Historical Working Papers 0032, National Bureau of Economic Research, Inc.
  7. Park, Donghyun & Shin, Kwanho, 2009. "Saving, Investment, and Current Account Surplus in Developing Asia," ADB Economics Working Paper Series 158, Asian Development Bank.
  8. Ronald Lee & Sang-Hyop Lee & Andrew Mason, 2006. "Charting the Economic Life Cycle," NBER Working Papers 12379, National Bureau of Economic Research, Inc.
  9. Ronald D Lee & Andrew Mason & Tim Miller, 1998. "Saving, Wealth, and Population," Working Papers 199805, University of Hawaii at Manoa, Department of Economics.
  10. David E. Bloom & David Canning & Bryan Graham, 2003. "Longevity and Life-cycle Savings," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 319-338, 09.
  11. Ralph C. Bryant, 2005. "Demographic Interactions Between North and South and the Implications for North-South Capital Flows," Working Papers, Center for Retirement Research at Boston College wp2005-16, Center for Retirement Research, revised Dec 2005.
  12. Marga Peeters, 2011. "Modelling unemployment in the presence of excess labour supply," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 54(2), pages 58-92.
  13. Marga Peeters & Loek Groot, 2011. "Demographic Change Across The Globe Maintaining Social Security In Ageing Economies," EERI Research Paper Series EERI_RP_2011_18, Economics and Econometrics Research Institute (EERI), Brussels.
  14. Marga Peeters & Loek Groot, 2012. "A Global View On Demographic Pressure And Labour Market Participation," Journal of Global Economy, Research Centre for Social Sciences,Mumbai, India, vol. 8(2), pages 165-194, June.
  15. Peeters, Marga & Sabri, Nidal Rachid, 2012. "International financial integration of Mediterranean economies : A bird’s-eye view," MPRA Paper 38081, University Library of Munich, Germany.
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