Demographics and the Evolution of Global Imbalances

61 Pages Posted: 18 Jan 2018 Last revised: 29 Apr 2020

See all articles by Michael Sposi

Michael Sposi

Southern Methodist University (SMU)

Date Written: 2017-12-01

Abstract

The age distribution evolves asymmetrically across countries, influencing relative saving rates and labor supply. Emerging economies experienced faster increases in working age shares than advanced economies did. Using a dynamic, multicountry model I quantify the effect of demographic changes on trade imbalances across 28 countries since 1970. Counterfactually holding demographics constant reduces net exports in emerging economies and boosts them in advanced economies. On average, a one percentage point increase in a country’s working age share, relative to the world, increases its ratio of net exports to GDP by one-third of a percentage point. These findings alleviate the allocation puzzle.

Keywords: Demographics, Trade imbalances, Dynamics, Labor supply

JEL Classification: F11, F21, J11

Suggested Citation

Sposi, Michael, Demographics and the Evolution of Global Imbalances (2017-12-01). Globalization and Monetary Policy Institute Working Paper No. 332, Available at SSRN: https://ssrn.com/abstract=3103794 or http://dx.doi.org/10.24149/gwp332r1

Michael Sposi (Contact Author)

Southern Methodist University (SMU) ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

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