IDEAS home Printed from
   My bibliography  Save this paper

Demographic Transition and International Flows of Capital: What Can an OLG Model Tell Us?


  • Team INGENUE


DEMOGRAPHIC TRANSITION AND INTERNATIONAL FLOWS OF CAPITAL: WHAT CAN AN OLG MODEL TELL US? INGENUE Team (Aglietta CEPII , Breton MODEM , Chateau CEPII , Fayolle OFCE , Juillard CEPREMAP , LeCacheux OFCE , Touze OFCE ) Demographic transition happens and will continue to unfold at different rythms in different region of the world. That means that the concentration of high saving groups will move from region to region and so will the location of the largest groups in age of working which in turn determines the location of most profitable investment. Important flows of capital between regions would result. In order to study this question, we built INGENUE, a world--wide, multiregional, general equilibrium, overlaping generation model. Its general architecture has been presented at last conference. This year, we want to report on first results and methodological difficulties that one encounters in such endeavour. The basic scenario takes the historical situation at the end of the XXth century as initial conditions and simulates households consumption and saving decisions in a transition toward a very far away balanced growth path. The demography is taken as given and is based on UN population forecasts. Technological change and the speed of convergence of productivity between regions is as well taken as given. Many OLG models have been calibrated to national economies. However, at a world level, there is a much greater degree of uncertainty concerning the value of key parameters. This makes only more necessary a detailed sensitivity analysis which we present in the paper. Among others, we present different scenarios concerning the speed of convergence and future evolution of life expectancy. As one can expect in such a model, the institutions of social security (in particular the relative importance of the pay--as--you--go system) play a crucial role in the determination of savings. So different policy experiments are conducted, varying the age of retirement, the amount of social security benefits or the rate of social security tax. In conclusion, we present the main areas needing improvement and outline the main ideas for a second stage in our modeling effort.

Suggested Citation

  • Team INGENUE, 2001. "Demographic Transition and International Flows of Capital: What Can an OLG Model Tell Us?," Computing in Economics and Finance 2001 212, Society for Computational Economics.
  • Handle: RePEc:sce:scecf1:212

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    1. Christiano, Lawrence J & Eichenbaum, Martin & Evans, Charles, 1996. "The Effects of Monetary Policy Shocks: Evidence from the Flow of Funds," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 16-34, February.
    2. Holly,Sean & Weale,Martin (ed.), 2000. "Econometric Modelling," Cambridge Books, Cambridge University Press, number 9780521650694, March.
    3. Kevin D. Hoover & Stephen J. Perez, 1999. "Data mining reconsidered: encompassing and the general-to-specific approach to specification search," Econometrics Journal, Royal Economic Society, vol. 2(2), pages 167-191.
    4. Krolzig, Hans-Martin & Hendry, David F., 2001. "Computer automation of general-to-specific model selection procedures," Journal of Economic Dynamics and Control, Elsevier, vol. 25(6-7), pages 831-866, June.
    5. Hendry, David F., 1995. "Dynamic Econometrics," OUP Catalogue, Oxford University Press, number 9780198283164.
    6. Hendry, David F., 1984. "Monte carlo experimentation in econometrics," Handbook of Econometrics,in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 16, pages 937-976 Elsevier.
    7. Lovell, Michael C, 1983. "Data Mining," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 1-12, February.
    8. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    9. Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, vol. 58(1), pages 113-144, January.
    10. David F. Hendry & Hans-Martin Krolzig, 1999. "Improving on 'Data mining reconsidered' by K.D. Hoover and S.J. Perez," Econometrics Journal, Royal Economic Society, vol. 2(2), pages 202-219.
    11. Brüggemann, Ralf & Lütkepohl, Helmut, 2000. "Lag selection in subset VAR models with an application to a US monetary system," SFB 373 Discussion Papers 2000,37, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    12. Hendry, David F, 1980. "Econometrics-Alchemy or Science?," Economica, London School of Economics and Political Science, vol. 47(188), pages 387-406, November.
    Full references (including those not matched with items on IDEAS)

    More about this item


    social security; OLG models;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sce:scecf1:212. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.