Age Distributions and the Current Account -A Changing Relation?

Thomas Lindh and Bo Malmberg
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Bo Malmberg: Institute of Housing Research, Postal: Department of Economics, Uppsala University, Box 785, SE-801 29 Gävle, Sweden, Sweden

No 1999:21, Working Paper Series from Uppsala University, Department of Economics

Abstract: In recent research age distribution effects on the current account have been found in cross-country panel regressions. The reason is different effects on saving and investment from cohort-size variation. In a panel of annual OECD data 1960-1995, we find that the age effects on saving are similar to results on world samples but the effects on investment are very different. The respective age profiles of saving and investment are much more similar in the OECD sample. This may be one factor accounting for the home-country bias found in international capital markets. Disaggregating investment we find that young cohorts have a positive correlation with housing investment while older but still active cohorts have a positive correlation with business investment. The differences in saving and investment effects are, nevertheless, sufficient to generate persistent and sizeable age effects on the current account. Our results suggest that policies concerning current account balance should take into consideration age distributions and the degree of development.

Keywords: age distribution; home-country bias; saving; investment; current account; OECD (search for similar items in EconPapers)
JEL-codes: E20 J10 O57 (search for similar items in EconPapers)
Pages: 35 pages
Date: 1999-10-20
New Economics Papers: this item is included in nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: Age Distributions and the Current Account - A Changing Relation? (1999)
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