Macroeconomic Impacts of Global Demographic Change on Australia

Weifeng Liu and Warwick McKibbin

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: The world will experience dramatic demographic change over this century. This paper examines the impacts of this global demographic change on the Australian economy at both the aggregate and sectoral levels in a global multi-region and multi-sector general equilibrium model. Using a detailed structural model, we simulate demographic shocks of six regions in the world economy as well as Australian own demographic shock to investigate their impacts on Australian macroeconomic conditions, economic structure and trade patterns. The results suggest that demographic change in different regions of the world economy will have different impacts on sectors in Australia depending on trade patterns between Australia and other regions and also between other regions. The energy, mining and durable manufacturing sectors in Australia are the most affected. Demographic change in China, Japan and Korea has significant negative impacts on Australia, but partly offsetting these shocks are positive demographic shocks from emerging Asia. The overall impact of the rest of the world on Australian GDP is quantitatively negligible, but the impacts on the real interest rate and trade balances are significant. Global demographic change increases Australian real interest rates in the next two decades on the assumption that emerging countries can access global capital markets and take advantage of their demographic dividends.

Keywords: Global demographic change; Australian economy; international trade; international capital flows; DSGE; CGE; heterogeneous agents; G-Cubed (search for similar items in EconPapers)
JEL-codes: C63 C68 E21 F32 F41 J11 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2020-03
References: Add references at CitEc
Citations:

Downloads: (external link)
https://crawford.anu.edu.au/sites/default/files/2025-01/22_2020_liu_mckibbin.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2020-22

Access Statistics for this paper

More papers in CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University Contact information at EDIRC.
Bibliographic data for series maintained by Cama Admin ().