DP4644 Population Ageing and International Capital Flows

Author(s): David Domeij, Martin Flodén
Publication Date: September 2004
Keyword(s): current account, demographics, Feldstein-Horioka puzzle, international capital mobility
JEL(s): E22, F21, F41, F47
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4644

We use the neoclassical growth framework to model international capital flows in a world with exogenous demographic change. We compare model implications and actual current account data and find that the model explains a small but significant fraction of capital flows between OECD countries, in particular after 1985.