Narciso, Alexandre (2010): The impact of population ageing on international capital flows.
Download (243kB) | Preview
This paper is oriented to study the relationship between demographical factors and international capital flows. We analyse the impact of ageing on foreign direct investments (FDI) and foreign portfolio investments (FPI) on a bilateral level. Firstly we present a theoretical foundation of the relationship and then we test it by an empirical model. Theoretical foundations are based on the lifecycle hypothesis and overlapping generations model in a demographic context. The bilateral FDI and FPI are modelled by using fixed effects balanced panel data. The results suggest that the current and future age structure of the nation has significant effect on current international capital flows.
|Item Type:||MPRA Paper|
|Original Title:||The impact of population ageing on international capital flows|
|Keywords:||International Capital Flows; Demography; Capital Mobility; FDI; Portfolio Investment|
|Subjects:||G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets
E - Macroeconomics and Monetary Economics > E0 - General > E00 - General
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J20 - General
|Depositing User:||Alexandre Narciso|
|Date Deposited:||08. Nov 2010 20:11|
|Last Modified:||15. Feb 2013 14:29|
Ando, A. and F. Modigliani (1963): “The Life-Cycle Hypothesis of Saving: Aggregate Implications and Tests”. American Economic Review 53: pp. 55-84.
Auerbach, A.J. and L.J. Kotlikoff (1987): Dynamic Fiscal Policy. Cambridge: Cambridge University Press.
Bashki, G. S. and Z. Chen (1994): “Baby Boom, Population Aging, and capital Markets”. The Journal of Business 67(2): pp. 165-202. Univ. of Chicago Press.
Bloom, D.E., D. Canning, and J. Sevilla (2001): “Economic Growth and the Demographic Transition”. NBER Working Paper 8685.
Bloom, D.E., D. Canning, R. Mansfield, and M. Moore (2006): “Demographic Change, Social Security Systems, and Savings”. NBER Working Paper 12621.
Bommier A. and R. D. Lee (2000): “Overlapping Generations Models with Realistic Demography”. University of California at Berkeley, Working Paper 002.
Börsch-Supan, A., A. Ludwig, and J. Winter (2002): “Ageing and International Capital Flows”. Working Paper 02-27. MEA, University of Mannheim.
Börsch-Supan, A., A. Ludwig, and J. Winter (2005): “Aging, Pension Reform, and Capital Flows: A Multi-Country Simulation Model”. NBER Working Paper 11850.
Börsch-Supan, A., A. Ludwig, and M. Sommer (2007): “Aging and Asset Prices”. MEA Discussion Paper, 129: pp. 1-75. Brooks, R. (2000): “What Will Happen to Financial Markets When Baby Boomers Retire?”. Discussion paper WP/00/18. International Monetary Fund.
Bryant, R.C. (2004): “Cross-Border Macroeconomic Implications of Demographic Change”. Brookings Discussion Papers in International Economics, No.166.
Carmichael, B. and A. Coen (2003): “International Portfolio Choice in an Overlapping Generations Model with Transaction Costs”. Economics Letters 80: pp. 269-275.
Carstensen, K. and F. Toubal (2003): “Foreign direct investment in Central and Eastern European countries : a dynamic panel analysis”, Kiel Working Paper, Institute for World Economics.
Charles Yuji Horioka, C.Y., W. Suzuki, and T. Hatta (2007): “Aging, Saving, and Public Pensions in Japan”. NBER Working Paper 13273
Chun, Y.J. (2006): “Population Aging, Fiscal Policies, and National Saving: Prediction for Korean Economy”. NBER Working Paper 12265.
Coale, A. J. and E. M. Hoover (1958): Population Growth and Economic development in Low-Income Countries. Princeton: Princeton University Press.
Cole, H. L. and W. B. English (1991): “Expropriation and Direct Investment”. Journal of International Economics, 30(May): pp. 201-27.
Cole, H. L. and W. B. English (1992): “Two-Sided Expropriation and Equity Contracts”. Journal of International Economics, 33(May): pp. 77-104.
Collins, S. M. (1991): “Saving Behavior in Ten Developing Countries”. In D.B. Bernheim and J.B. Shoven (Eds), National Saving and Economic Performance, A National Bureau of Economic Research Project Report: pp. 349-375. Chicago: University of Chicago Press.
D’Albis, H. (2007): “Demographic Structure and Capital Accumulation”. Journal of Economic Theory, 132: pp. 411-434.
Faruqee, H. (2002): “Population Aging and Its Macroeconomic Implications: A Framework for Analysis”. International Monetary Fund WP/02/16.
Fehr, H, S. Jokisch, and L. Kotlikoff (2004): “The Role of Immigration in Dealing With the Developed World’s Demographic Transition”. NBER Working Paper 10512.
Feldstein, M. (1994): “Tax Policy and International Capital Flows”. NBER Working Paper 4851.
Feldstein, M. (1999): “International Capital Flows”. NBER Conference Report.
Feldstein, M. (2001): “The Future of Social Security Pensions in Europe”. NBER Working Paper 8487.
Feldstein, M. and C. Horioka (1980): “Domestic saving and international capital Flows”. Economic Journal 90: pp.314-329.
Flötotto, M. (2006): Housing and Portfolio Choice: A Life Cycle Simulation Model. Diploma Thesis, Manheim: MEA.
Frankel, J. A. (1992): “Measuring International Capital Mobility: A Review”. American Economic Association – Papers and Proceedings 82(2): pp. 197-202.
French, K. R. and J. M. Poterba (1991): “Investor diversification and International Markets”. American Economic Association – Papers and Proceedings 81(2): pp. 222-226.
Goyal, A. (2002): “Demographics, Stock Markets Flows, and Stocks Returns”. Anderson Graduate School Of Management, UCLA, Research Paper.
Higgins, M. and J. G. Williamson (1996): “Asian Demography and Foreign Capital Dependence”. NBER Working Paper 5560.
Higgins, M. and J. G. Williamson (1997): “Age Structure Dynamics in Asia and Dependence on Foreign Capital”. Population and Development Review, New York Population Council, 23(2): pp. 261-293.
Higgins, M. D. (1994): The Demographic Determinants of Savings, Investment and International Capital Flows. PhD Dissertation Thesis, Harvard University. Cambridge, MA.
Higgins, M. D. (1998): “Demography, National Savings, and International Capital Flows”. International Economic Review, 39(2): pp. 343-369.
Hock, H. and D. N. Weil (2006): “The Dynamics of the Age Structure, Dependency, and Consumption”. NBER Working Paper 12140.
Holzmann, R. (2000): “Can Investments in Emerging Markets help to solve the Aging Problem”. CESifo Working Paper 304, Munich.
Hull, L. and L. Tesar (2000): “Risk, Specialisation and The Composition of International Capital Flows”. University of Michigan, Working Paper.
Hull, L. and L. Tesar (2000): “The Structure of International Capital Flows”. University of Michigan, Working Paper.
Irmen, A. (2009): "Population Aging and the Direction of Technical Change". Working Papers 0493, University of Heidelberg, Department of Economics.
Jagannathan, R. and N.R. Kocherlakata (1996): “Why should older people invest less in stock than younger people?”. Federal Reserve Bank of Minneapolis, Quarterly Review, 1996(2): pp.11-23.
Kang, J.-K. and R. Stulz (1997): “Why Is There a Home Bias? An Analysis of Foreign Portfolio Equity Ownership in Japan”. Journal of Financial Economics, 46: pp. 3-28.
Knickerbocker, F.T. (1973): Oligopolistic Reaction and Multinational Enterprise. Boston: Harvard University Press.
Krueger, D. and A. Ludwig (2007): “On the Consequences of Demographic Change for Rates of Returns to Capital, and the Distribution of Wealth and Welfare”. Journal of Monetary Economics, vol. 54(1): pp. 49-87.
Lane, P.R and G.M. Milesi-Ferretti (2008): “International Investment Patterns”. Review of Economics and Statistics, 90(3):: pp. 538-549.
Lane. P.R. and G. M. Milesi-Ferretti (2000): “External Capital Structure: Theory and Evidence”. CEPR Discussion Paper 2583.
Ludwig, A., D. Krueger, and A.H. Börsch-Supan (2007): “Demographic Change, Relative Factor Prices, International Capital Flows, and Their Differental Effects on the Welfare of Generations”. NBERWorking Paper 13185.
Lührmann, M. (2006): Essays on the Impact of Demographic Change on Capital, Goods and Labor Markets. PhD Dissertation, Inauguraldissertation zur Erlangung des akademischen Grades eines Doktors der Wirtschaftswissenschaften der Universität Mannheim, University of Mannheim.
MacKellar, L. and H. Reisen (1998): “A Simulation Model of Global Pension Investment”: OECD Development Centre Technical Papers 137, Paris.
Mason, A. (1988): “Saving, Economic Growth and Demographic Change”. Population and Development Review 14(1): pp. 113-144.
Modigliani, F. (1988): “The Role of Intergenerational Transfers and Life Cycle Saving in the Accumulation of Wealth”. The Journal of Economic Perspectives, Vol. 2, No. 2: pp. 15-40.
Modigliani, F. and R. Brumberg (1954): “Utility Analysis and the Consumption Function: An Interpretation of Cross-Section Data”. In K.K. Kurihara (Ed.), Post-Keynesian Economics. Rutgers University Press, New Brunswick, pp. 388-436.
Obstfeld, M. (1995), “International Capital Mobility in the 1990s”. In P.B. Kenen (Ed.), Understanding Interdependence – The Macroeconomics of the Open Economy. Princeton: Princeton University Press, pp. 201-261.
Portes, R. and H. Rey (2005): "The Determinants of Cross-Border Equity Flows". Journal of International Economics, vol. 65(2): pp. 269-296.
Poterba, J. M. (1998): “Population Age Structure and Asset Returns: An Empirical Investigation”. NBER Working Paper 6774.
Poterba, J. M. (2004): “The Impact of Population Aging on Financial Markets”. NBER Working Paper 10851.
Poterba, J. M., J. Rauh, S. Venti, and D. Wise (2006): “Lifecycle Asset Allocation strategies and the Distribution of 401(K) Retirement Wealth”. NBER Working Paper 11974.
Razin, A. and E. Sadka (2001): Labor, Capital and Finance: International Flows. Cambridge: Cambridge University Press. Reisen, H. (2000): “Pensions, Savings and Capital Flows -The Economics of Global Pension Flows”, OECD.
Sachs, J. D. and A. Warner (1995): “Economic Reform and the Process of Global Integration”. Brookings Papers on Economic Activity 1995(1): pp. 1-96.
Sadka E. (2001): “Demographic Shocks and Global Factor Flows: Discussion” Presented at the Federal Reserve Bank of Boston conference on “Seismic Shifts: The Economic Impact of Demographic Change”.
Shoven, J.B. and G.S. Goda (2008): “Adjusting Government Policies for Age Inflation”. NBER Working Paper 14231.
Stein, E.H. and C. Daude (2007): “Longitude Matters: Time Zones and the Location of FDI,” Journal of International Economics 71(1): pp. 96–112.
Taylor, A. M. (1998): “Argentina and the World Capital Market: Saving, Investment, and International Capital Mobility in 20th Century”. Journal of Development Economics 57: pp. 147-184.
Taylor, A. M. and J. G. Williamson (1994): “Capital Flows to the New World as an Intergenerational transfer”. Journal of Political Economics 102(2): pp. 384-371.
Taylor, A.M. (1994): “Domestic Savings and International Capital Flows Reconsidered”. NBER Working Paper 4892.
Vernon, R. (1966): “International Investment and International Trade in the Product Cycle”. Quarterly Journal of Economics 80: pp. 190-207.
Wei, S.-J. (2000): “How Taxing Is Corruption on International Investors?” Review of Economics and Statistics, Vol. 82 (1): pp. 1-11.
Williamson, J. G. (2001): “Demographic Shocks and Global Factor Flows”. Presented at the Federal Reserve Bank of Boston conference on “Seismic Shifts: The Economic Impact of Demographic Change”. World Bank (1997): Private capital flows to developing countries: the road to financial integration, International Bank for Reconstruction and Development, Oxford Univ. Press.
Yoo, P. S. (1994): “The Baby Boom and International Capital Flows”. Federal Reserve Bank of St. Louis Working Paper 1994-031A.