Capital Flows in an Aging World

113 Pages Posted: 17 Sep 2018

See all articles by Zsofia Barany

Zsofia Barany

Sciences Po

Nicholas Coeurdacier

Sciences Po

Stéphane Guibaud

SciencesPo - Department of Economics

Date Written: September 2018


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.

Keywords: aging, Household Saving, International Capital Flows

JEL Classification: E21, F21, J11

Suggested Citation

Barany, Zsofia and Coeurdacier, Nicholas and Guibaud, Stephane, Capital Flows in an Aging World (September 2018). CEPR Discussion Paper No. DP13180. Available at SSRN:

Nicholas Coeurdacier

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337

Stephane Guibaud

SciencesPo - Department of Economics ( email )

28 Rue des Saints-Pères
Paris, 75007

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