Demographics and the Evolution of Global Imbalances

Michael Sposi

No 262, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: Differential changes in the age distribution across countries has sharp implications for the evolution of global imbalances. I develop a dynamic, multicountry, Ricardian trade model with endogenous labor supply to measure the effect of demographics on trade imbalances across 28 countries from 1970-2014. Changes in the age distribution impact a country's net exports directly through the demand for net saving and indirectly through relative labor supply. Counterfactually removing demographic-induced changes to saving demand imply substantially lower net exports in emerging economies that experience relatively fast increases in working age shares, and higher net exports in advanced economies that experienced flat, and even declining, working age shares. On average, one percentage point increase in a country's working age share relative to the world increases the ratio of net exports to GDP by 14 percentage points. This finding helps reconcile the allocation puzzle.

Date: 2019
New Economics Papers: this item is included in nep-age and nep-int
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Related works:
Journal Article: Demographics and the evolution of global imbalances (2022)
Working Paper: Demographics and the Evolution of Global Imbalances (2021)
Working Paper: Demographics and the Evolution of Global Imbalances (2019)
Working Paper: Demographics and the Evolution of Global Imbalances (2019)
Working Paper: Demographics and the Evolution of Global Imbalances (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:262

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