EconPapers    
Economics at your fingertips  
 

Demographics and the Evolution of Global Imbalances

Michael Sposi ()

No 1906, Departmental Working Papers from Southern Methodist University, Department of Economics

Abstract: The age distribution evolves asymmetrically across countries, influencing capital flows through differences in aggregate saving rates and labor supply. I build a general equilibrium model featuring overlapping generations and international trade where dynamics are driven by capital accumulation and borrowing and lending. The equilibrium can be replicated by a model in which every country is inhabited by a representative household that experiences an endogenous, time-varying discount factor reflecting the co-evolution of the entire age distribution and relevant prices. This equivalence affords computation of the exact transitional dynamics. I calibrate the model to match national accounts and bilateral trade data and quantify how demographic forces affected capital flows between 28 countries since 1970. On average, increasing a country's mean age by one year boosts its current account by 0.4 percent of GDP. Observed bilateral trade patterns dictate the cross-country dispersion and magnitude of capital flows in response to changes in any individual country's demographics.

Keywords: Demographics; Global imbalances; Dynamics; International trade (search for similar items in EconPapers)
JEL-codes: F11 F21 J11 (search for similar items in EconPapers)
Date: 2019-10
New Economics Papers: this item is included in nep-age, nep-int and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://ftp1.economics.smu.edu/WorkingPapers/2019/SPOSI/SPOSI-2019-10.pdf (application/pdf)

Related works:
Working Paper: Demographics and the Evolution of Global Imbalances (2021) Downloads
Working Paper: Demographics and the Evolution of Global Imbalances (2019) Downloads
Working Paper: Demographics and the Evolution of Global Imbalances (2019) Downloads
Working Paper: Demographics and the Evolution of Global Imbalances (2017) Downloads
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:smu:ecowpa:1906

Access Statistics for this paper

More papers in Departmental Working Papers from Southern Methodist University, Department of Economics Department of Economics, P.O. Box 750496, Southern Methodist University, Dallas, TX 75275-0496.
Bibliographic data for series maintained by Ömer Özak ().

 
Page updated 2021-10-11
Handle: RePEc:smu:ecowpa:1906