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GTAP Resource #4162

"Population Aging in the Interdependent Global Economy: A Computational Approach with an Overlapping Generations Model of Global Trade"
by Oyamada, Kazuhiko and Ken Itakura

Since the latter half of the 1990s, it has been discussed that many developing countries would face a serious population aging problem because these economies are still underdeveloped and not adequately prepared against aging in terms of institutions such as social security. As the global interdependence of national economies has been deepened, a socio-economic problem in one country may have significant influences on many other economies and its effect might spillover around the world. The main objectives of our study are to analyze: (1) patterns of interregional spillovers of demographic change; (2) the international effects stemming from pension reform in a particular country; and (3) role of foreign aid to developing region where investment funds are insufficient when compared to their labor supply because of the immature capital market, with special emphasis on trade and capital flows among regions.

This study presents a basic analysis on interregional cooperative framework which may offset negative effects of population aging and make it possible to take advantage of the so-called "population dividends" that are derived from the population structure with a large size of working population relative to the number of dependent population. A country under faster aging process would become a capital exporter to other countries at relatively moderate aging stage. As capital export would undermine assets over the long run, it would be possible for the faster aging country to eventually become a capital importer.

Using a numerical Overlapping Generations (OLG) model that includes five regions with different demographic structure (high-income countries, Japan, mainland China, other Asia, and other low-income countries), we conduct simulation analysis to examine effects of (a) pension reforms, such as increase of contribution rate, decrease of replacement rate, and raising of pension age, respectively implemented in high-income countries and/or Japan; (b) for...

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Version: 1
Created: Oyamada, K. (4/15/2013)
Updated: Oyamada, K. (4/15/2013)
Visits: 1,569
- Dynamic modeling
- Demographics
- Economic growth

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