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The Demographic Transition in Closed and Open Economies: A Tale of Two Regions

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  • Giovanni L. Violante
  • Orazio P. Attanasio

Abstract

This paper constructs a general equilibrium overlapping generation model to evaluate quantitatively how demographic transition (falling mortality and fertility rates) affects aggregate variables (wages, interest rate, output), and inter-generational welfare in closed and open economies. We perform this analysis for two economies calibrated to resemble the North (US and Europe) and Latin America. Our simulations suggest that the demographic transition could have generated income per capita growth up to 0. 5% per year in excess of steady-state growth in the past 50 years in Latin America and 0. 3% in the North.

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  • Giovanni L. Violante & Orazio P. Attanasio, 2000. "The Demographic Transition in Closed and Open Economies: A Tale of Two Regions," Research Department Publications 4194, Inter-American Development Bank, Research Department.
    • Handle: RePEc:idb:wpaper:4194
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    Cited by:

    1. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    2. Cristina POMBO RIVERA & Oscar Mauricio VALENCIA, 2007. "Tributación óptima en un sistema PAYGO," Archivos de Economía 3660, Departamento Nacional de Planeación.
    3. Arezki, Rabah, 2010. "Asymmetric demographic shocks and institutions: The impact on international capital flows and welfare," MPRA Paper 27683, University Library of Munich, Germany.
    4. Axel Börsch-Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi-Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    5. Eswar S. Prasad & Kenneth Rogoff & Shang-Jin Wei & M. Ayhan Kose, 2007. "Financial Globalization, Growth and Volatility in Developing Countries," NBER Chapters, in: Globalization and Poverty, pages 457-516, National Bureau of Economic Research, Inc.
    6. Rabah, Arezki, 2011. "Demography, credit and institutions: A global perspective," Emerging Markets Review, Elsevier, vol. 12(2), pages 79-93, June.
    7. Martin Flodén, 2003. "Public Saving and Policy Coordination in Aging Economies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 379-400, September.
    8. Börsch-Supan, Axel & Ludwig, Alexander & Sommer, Mathias, 2005. "Aging and Asset Prices," Sonderforschungsbereich 504 Publications 07-29, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    9. Douglas Gollin & Fabian Lange, 2013. "Equipping immigrants: migration flows and capital movements in small open economies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(4), pages 749-777, December.
    10. Miguel Székely & Orazio P. Attanasio, 2000. "El ahorro familiar en los países en desarrollo, desigualdad, factores demográficos y todo eso: ¿Qué tan distintos son América Latina y el Sureste de Asia?," Research Department Publications 4222, Inter-American Development Bank, Research Department.
    11. Michael Feroli, 2003. "Capital flows among the G-7 nations: a demographic perspective," Finance and Economics Discussion Series 2003-54, Board of Governors of the Federal Reserve System (U.S.).
    12. Miguel Székely & Orazio P. Attanasio, 2000. "Household Saving in Developing Countries - Inequality, Demographics and All That: How Different are Latin America and South East Asia?," Research Department Publications 4221, Inter-American Development Bank, Research Department.
    13. Feroli, Michael, 2006. "Demography and the U.S. current account deficit," The North American Journal of Economics and Finance, Elsevier, vol. 17(1), pages 1-16, March.
    14. Börsch-Supan, Axel, 2004. "Global aging : issues, answers, more questions," Papers 07-28, Sonderforschungsbreich 504.
    15. Mr. Tim Callen & Warwick J. McKibbin & Nicoletta Batini, 2006. "The Global Impact of Demographic Change," IMF Working Papers 2006/009, International Monetary Fund.
    16. Turnovsky, Stephen J., 2019. "Demographic structures, savings, and international capital flows," Journal of International Money and Finance, Elsevier, vol. 98(C), pages 1-1.

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