Population Aging and Global Capital Flows in a Parallel Universe

By Robin Brooks. Social Science Research Network, 2000

181 citations recorded by the source corpus.

This paper uses a multiregion overlapping generations model with perfect capital mobility to simulate the general equilibrium effects of projected population trends on international capital flows. It finds that retirement saving by aging baby boomers will raise the supply of capital substantially above investment in both the European Union and North America, causing both regions to export large amounts of capital to Africa, Latin America, and other emerging markets in the years ahead. Beyond 2010, however, baby boomers in the European Union and North America will dissave in retirement, causing both regions to become capital importers. This shift will be financed by capital flows from Latin America and other emerging markets, while Africa will remain dependent on foreign capital for the foreseeable future because of continued high population growth. Despite severe population aging, Japan is predicted to remain a substantial capital exporter beyond 2030.

Subfields: Economics and Econometrics, General Health Professions

View Paper: https://www.semanticscholar.org/paper/84ca8c962f262a2c425bf1018af35cc9542fe234

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Citations in the corpus

The Feldstein-Horioka Puzzle: a Panel SmoothTransition Regression Approach (2007, unknown): “As Brooks (2003) put it, a younger population invests more and saves less.”
The Role of Immigration in Dealing with the Developed World's Demographic Transition (2004, background): “Brooks and A. Razin (ed.): The Politics and Finance of Social Security Reform, Cambridge University Press. Gokhale, J. L.J. Kotlikoff, J. Senfton and M. Weale (2001): Simulating the Transmission of Wealth Inequality via Bequests, Journal of Public Economics 79, 93-128. INGENUE (2002): Macroeconomic ”
Demography and the Long-Run Predictability of the Stock Market (2004, unknown): “See Brooks (2003) for the solution method.”
Aging, pension reform and capital flows: a multi-country simulation model (2004, unknown): “Second, our analysis is related to several recent papers that compare implications for capital flows predicted by OLG models with actual current account data (see, e.g., Brooks, 2003; Feroli, 2002; Henriksen, 2002; Domeij and Floden, 2005).”
On the consequences of demographic change for rates of returns to capital, and the distribution of wealth and welfare (2006, methodology): “From equation (10) we immediately see that despite the fact that the interest rate and the savings rate are negatively related (see equation (8)), a decline in the working age to population ratio ~°N leads to both a decline in the rate of return r and in the saving rate sr: What is the intuition? A ”