Report

Demography, national savings and international capital flows

Abstract: This paper addresses the relationship between age distributions, national savings and the current account balance. The results point to substantial demographic effects, with increases in both the youth and old-age dependency ratios associated with lower savings rates. They also point to differential effects on savings and investment, and thus to a role for demography in determining the current account balance. The estimated demographic effect on the current account balance exceeds six percent of GDP over the last three decades for a number of countries and, given expected demographic trends, is likely to be substantially larger over the coming decades.

Keywords: demography; saving and investment; capital movements;

JEL Classification: F21; J1;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 1997-12-01

Number: 34

Note: For a published version of this report, see Matthew Higgins, "Demography, National Savings, and International Capital Flows," International Economic Review 39, no. 2 (May 1998): 343-69.