Ageing policy reforms and international capital flow in a computable two-country OLG model

Akira Sadahiro and Manabu Shimasawa

ESRI Discussion paper series from Economic and Social Research Institute (ESRI)

Abstract: We have developed a computable two-country general equilibrium model with overlapping generations of agents. Two main issues are addressed: (i) how does the differential ageing process across countries affect international capital flow, and (ii) to what extent do the policy reforms play a significant role in the international capital movement. Our analysis indicates that the differential ageing process promotes international capital flow from ageing countries to population-growth countries. Also, by raising the rate of return on capital, international capital flow could improve the economic welfare of the generations of the ageing country. Finally, the countries with ageing populations improve economic welfare by implementing policy reforms that raise the savings rate with or without policy changes within labor-abundant countries. JEL classification: E27; F21; G15; H55; J11

Keywords: ageing; policy reform; international capital flow; overlapping generations (search for similar items in EconPapers)
Pages: 24 pages
Date: 2004-04
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Persistent link: https://EconPapers.repec.org/RePEc:esj:esridp:097

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