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Discussion Paper Details

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Title: Capital Flows in an Aging World

Author(s): Zsofia Barany, Nicolas Coeurdacier and Stéphane Guibaud

Publication Date: September 2018

Keyword(s): aging, Household Saving and International Capital Flows

Programme Area(s): International Macroeconomics and Finance

Abstract: We investigate the importance of worldwide demographic evolutions in shaping capital flows across countries and over time. Our lifecycle model incorporates cross-country differences in fertility and longevity as well as differences in countries' ability to borrow inter-temporally and across generations through social security. In this environment, global aging triggers uphill capital flows from emerging to advanced economies, while country-specific demographic evolutions reallocate capital towards countries aging more slowly. Our quantitative multi-country overlapping generations model explains a large fraction of capital flows across advanced and emerging countries and a substantial portion of the prolonged decline in the world interest rate.

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Bibliographic Reference

Barany, Z, Coeurdacier, N and Guibaud, S. 2018. 'Capital Flows in an Aging World'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13180