Discussion paper

DP13180 Capital Flows in an Aging World

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.


Coeurdacier, N and Z Barany (2018), ‘DP13180 Capital Flows in an Aging World‘, CEPR Discussion Paper No. 13180. CEPR Press, Paris & London. https://cepr.org/publications/dp13180