The Global Impact of Demographic Change

By Tim Callen, Warwick J. McKibbin, Nicoletta Batini

January 1, 2006

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Tim Callen, Warwick J. McKibbin, and Nicoletta Batini. The Global Impact of Demographic Change, (USA: International Monetary Fund, 2006) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The world is in the midst of a major demographic transition. This paper examines the implications of such transition over the next 80 years for Japan, the United States, other industrial countries, and the developing regions of the world using a dynamic intertemporal general equilibrium four-country model containing demographics calibrated to the "medium variant" of the United Nations population projections. We find that population aging in industrial countries will reduce aggregate growth in these regions over time, but should boost growth in developing countries over the next 20-30 years, as the relative size of their workingage populations increases. Demographic change will also affect saving, investment, and capital flows, implying changes in global trade balances and asset prices. We also explore the sensitivity of the results to assumptions about future productivity growth and country external risk for the developing country region.

Subject: Aging, Demographic change, Health, Population and demographics, Population growth

Keywords: Aging, Baseline GDP, Capital flows, Central and Eastern Europe, Demographic change, Demographics, Developing country bloc, Developing country current account, Developing country GDP, Developing country goods, Developing country region, East Africa, Europe, Exchange rate, Global, Growth rate, Investment, Labor resources, Middle East, Output ratio, Physical capital, Population growth, Risk premium, Saving, World GDP growth, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/009
Stock No:

WPIEA2006009
ISBN:

9781451862690
ISSN:

1018-5941

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