Demographic Changes, Saving, and Current Account in East Asia

Soyoung Kim and Jong-Wha Lee

Asian Economic Papers, 2007, vol. 6, issue 2, 22-53

Abstract: This paper analyzes the empirical relationships among demographic changes, saving, and current account balances in East Asia. The panel Vector-Auto Regressive (VAR) model shows that an increase in the dependency rate, especially the elderly dependency rate, significantly lowers saving rates and subsequently worsens current account balances. The result implies that the future aging of the population in East Asia would have a significant impact on global capital flows and current account imbalances. (c) 2007 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Date: 2007
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