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Demographics, Pension Systems and the Saving-Investment Balance

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Listed:
  • Hua Chai
  • Mr. Jun I Kim

Abstract

This paper studies the effect of demographic change on national saving, global interest rates, and international capital flows, focusing on the role of the public pension system. We develop a small open economy overlapping generations model to illustrate the channels through which demographic variables and pension system generosity interact to affect both private and public saving behavior. We then extend this framework to a two-country setting and simulate scenarios of demographic change and pension reform. We find that the generosity of the pension system plays an important role in determining the movement of the global interest rate and patterns of international capital flows.

Suggested Citation

  • Hua Chai & Mr. Jun I Kim, 2018. "Demographics, Pension Systems and the Saving-Investment Balance," IMF Working Papers 2018/265, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2018/265
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    References listed on IDEAS

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    Cited by:

    1. Lei He & Zhengqi Wang, 2023. "The interaction effects of rising life expectancy and the public pension burden on aggregate savings and economic growth," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(2), pages 229-250, May.
    2. Olatunji Abdul Shobande & Oladimeji Tomiwa Shodipe, 2019. "Mechanics Of Investment Drivers In Chinese Economy," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 23, pages 7-32, June.

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