 The joint macroeconomic impacts of capital markets integration and fertilityReview of International Economics, 2023, vol. 31, issue 2, 687-720 Abstract: Population aging puts pressure on the financing of pension systems in many developed economies over the long run. Higher fertility would reduce the speed at which a population ages, and thus ease the financing pressure. The positive fiscal externality of childbearing decisions is well known in a single‐country context. I perform a quantitative investigation of this externality in a multi‐country context, to investigate the role of capital markets integration. On a sample of 14 European countries confronted with population aging, I find with simulations that the fiscal gains from a 70‐years increase in fertility are on average 1.3 larger with integrated capital markets than with separated capital markets in 50 years, while the GDP per capita gains are 5.0 larger. Positive fertility shocks indeed depress the capital‐labor ratio, increase the interest rate and thus attract foreign investors, when capital markets are open. Fertility increases and capital markets integration are however not sufficient to deal fully with the public finance challenge generated by population aging. More reforms are needed. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:reviec:v:31:y:2023:i:2:p:687-720 Ordering information: This journal article can be ordered from Access Statistics for this article Review of International Economics is currently edited by E. Kwan Choi More articles in Review of International Economics from Wiley Blackwell |
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