Analyses | 04 November 2005

The global macroeconomic consequences of a demographic transition

The world is in the midst of a significant demographic transition with important implications for the macroeconomic performance of the global economy. This paper summarises the key features of the current and projected future demographic changes that are likely to have macroeconomic effects. 

Warwick McKibbin

  • Warwick McKibbin

The world is in the midst of a significant demographic transition with important implications for the macroeconomic performance of the global economy. This paper summarises the key features of the current and projected future demographic changes that are likely to have macroeconomic effects. 

Warwick McKibbin

  • Warwick McKibbin
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Executive Summary

The paper then applies a new ten region global model (an extended version of the MSG-Cubed model) incorporating demographic dynamics, to examine the consequences of projected global demographic change on the world economy from 2005 to 2050. A distinction is made between the effects on each country/region of its own demographic transition and the effects on each country/region of the equally large demographic changes occurring in the rest of the world. It is estimated that the macroeconomic consequences of demographic change over coming decades are large for the world as a whole. For each country both domestic and foreign demographic changes are important.