The Global Impact of Demographic Change

Tim Callen, Warwick McKibbin and Nicoletta Batini

No 2006/009, IMF Working Papers from International Monetary Fund

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 workingage 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: WP; developing country region; growth rate; risk premium; exchange rate; demographics; capital flows; saving; investment; developing country GDP; physical capital; output ratio; developing country goods; developing country bloc; baseline GDP; world GDP growth; developing country current account; labor resources; Demographic change; Aging; Population growth; Global; Central and Eastern Europe; Middle East; East Africa; Europe (search for similar items in EconPapers)
Pages: 36
Date: 2006-01-01
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Citations: View citations in EconPapers (43)

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