The Global Impact of Demographic Change

36 Pages Posted: 3 Mar 2006

See all articles by Nicoletta Batini

Nicoletta Batini

International Monetary Fund (IMF)

Tim Callen

International Monetary Fund (IMF) - Asia and Pacific Department

Warwick J. McKibbin

Australian National University

Date Written: January 2006

Abstract

The world is in the midst of a major demographic transition. This paper examines the implications of such transition over the next 80 years for Japan, the United States, other industrial countries, and the developing regions of the world using a dynamic intertemporal general equilibrium four-country model containing demographics calibrated to the 'medium variant' of the United Nations population projections. We find that population aging in industrial countries will reduce aggregate growth in these regions over time, but should boost growth in developing countries over the next 20-30 years, as the relative size of their working-age populations increases. Demographic change will also affect saving, investment, and capital flows, implying changes in global trade balances and asset prices. We also explore the sensitivity of the results to assumptions about future productivity growth and country external risk for the developing country region.

Keywords: demographics, capital flows, saving, investment

JEL Classification: J11, F21, E21, E22

Suggested Citation

Batini, Nicoletta and Callen, Tim and McKibbin, Warwick J., The Global Impact of Demographic Change (January 2006). Available at SSRN: https://ssrn.com/abstract=888154 or http://dx.doi.org/10.2139/ssrn.888154

Nicoletta Batini (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Tim Callen

International Monetary Fund (IMF) - Asia and Pacific Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Warwick J. McKibbin

Australian National University ( email )

Crawfrod School of Public Policy
Canberra, ACT 2600
Australia
02-61250301 (Phone)
02-62735575 (Fax)

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