The role of demography on per capita output growth and saving rates

Miguel Sánchez-Romero

No WP-2011-015, MPIDR Working Papers from Max Planck Institute for Demographic Research, Rostock, Germany

Abstract: Computable OLG growth models and "convergence models" differ in their assessment of the extent to which demography influences economic growth. In this paper, I show that computable OLG growth models produce results similar to those of convergence models when more detailed demographic information is used. To do so, I implement a general equilibrium overlapping generations model to explain Taiwan's economic miracle during the period 1965-2005. I find that Taiwan's demographic transition accounts for 22% of per capita output growth, 16.4% of the investment rate, and 18.5% of the savings rate for the period 1965-2005. Decomposing the demographic effect into its components, I find that fertility alone explains the impact of demographic changes in per capita output growth, while both fertility and mortality explain investment and saving rates. Assuming a small open economy, I find that investment rates increase with more rapid population growth, while saving rates follows the dependence hypothesis (Coale and Hoover, 1958). Under a closed-economy, the population growth rate has a negative influence on economic growth.

Keywords: Taiwan; demography; economic growth (search for similar items in EconPapers)
JEL-codes: J1 Z0 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2011
New Economics Papers: this item is included in nep-age, nep-dem and nep-dge
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Journal Article: The role of demography on per capita output growth and saving rates (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:dem:wpaper:wp-2011-015

DOI: 10.4054/MPIDR-WP-2011-015

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