 Demographic structures, savings, and international capital flowsJournal of International Money and Finance, 2019, vol. 98, issue C, - Abstract: This paper investigates how the different demographic characteristics of two countries will drive the flow of capital between them, as inhabitants of the longer-lived nation have a higher savings rate than do those with the shorter lifespan. It is motivated by the recent US experience during which its net foreign asset position declined dramatically, while simultaneously its longevity has fallen increasingly below that of other developed G7 economies. Our contribution is to address the issue by introducing empirically based survival (mortality) functions into a traditional two country macrodynamic framework. In doing so, we eliminate some of the unsatisfactory aspects associated with the traditional two country representative agent model. The sensitivity of the capital flows and the resulting net foreign assets of the two economies to key structural characteristics, and their consequences for savings are emphasized. Keywords: Demographic transition; Net foreign assets; International capital flows (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:98:y:2019:i:c:6 DOI: 10.1016/j.jimonfin.2019.102062 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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