The global impact of demographic change
This paper examines the implications of the major demographic transition currently under way and over the next 80 years for Japan, the United States, the rest of the OECD, and developing regions.
Executive Summary
The impact on the world economy is evaluated 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 working-age population 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 risk for the developing country region.
