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Demographics and the Evolution of Global Imbalances

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  • Michael Sposi

    () (Southern Methodist University)

Abstract

The age distribution evolves asymmetrically across countries, influencing relative saving rates and labor supply. Emerging economies experienced faster increases in working age shares than advanced economies did. Using a dynamic, multi-country model I quantify the effect of demographic changes on trade imbalances across 28 countries since 1970. Counterfactually holding demographics constant reduces net exports in emerging economies and boosts them in advanced economies. On average, a one percentage point increase in a country's working age share, relative to the world, increases its ratio of net exports to GDP by one-third of a percentage point. These findings alleviate the allocation puzzle.

Suggested Citation

  • Michael Sposi, 2019. "Demographics and the Evolution of Global Imbalances," Departmental Working Papers 1902, Southern Methodist University, Department of Economics.
  • Handle: RePEc:smu:ecowpa:1902
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    References listed on IDEAS

    as
    1. Joseph Steinberg, 2019. "On the Source of U.S. Trade Deficits: Global Saving Glut or Domestic Saving Drought?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 200-223, January.
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    Cited by:

    1. Joseph Steinberg, 2018. "The Macroeconomic Impact of NAFTA Termination," 2018 Meeting Papers 753, Society for Economic Dynamics.
    2. Joseph Steinberg, 2019. "On the Source of U.S. Trade Deficits: Global Saving Glut or Domestic Saving Drought?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 200-223, January.

    More about this item

    Keywords

    Demographics; Trade imbalances; Dynamics; Labor supply.;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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