Demographic Destiny, Per-Capita Consumption, and the Japanese Saving-Investment Balance

Robert Dekle ()

Oxford Review of Economic Policy, 2000, vol. 16, issue 2, 46-60

Abstract: In this paper, we revisit the issue of the impact of demographic change on the Japanese saving investment balance. Using updated government projections, we show that the ageing of the population under way will steadily lower Japan's saving rate from 31 per cent of GDP today to 20 per cent of GDP in 2040. Japan's investment rate will remain close to its current level of 29 per cent. Thus, Japan's saving investment balance, or current account, will steadily decrease from its current level and will turn negative in 2025. In addition, we project the impact of demographic change on the evolution of Japanese consumption per capita, or "living standards". Despite the population ageing, we project that per-capita consumption will grow until 2010. However, under certain scenarios, consumption per capita falls in most years after 2010. Copyright 2000 by Oxford University Press.

Date: 2000
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