Open Economies Review

, Volume 25, Issue 5, pp 865–883

Demographic Change, International Trade and Capital Flows

Research Article

Abstract

Trade in goods that are not perfect substitutes can considerably change the predictions of standard neoclassical models about the effects of demographic developments. This paper considers a relative decrease in the population size of one country, when countries specialize in the production of different intermediate goods. The degree of substitutability is crucial for the direction of capital flows between the countries and for the development of wages. The less those goods are substitutes, the stronger the long-run international spillover effects of a demographic shock will be. For the interest rate effects, also international differences in saving rates due to e.g., different pension schemes have to be taken into account.

Keywords

International trade Demographic shock Overlapping generations Pensions Spillover effects 

JEL Classifications

F41 H55 J11 

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  • Igor Fedotenkov
    • 1
    • 3
  • Bas van Groezen
    • 2
  • Lex Meijdam
    • 2
  1. 1.Department of EconomicsUniversity of VeronaVeronaItaly
  2. 2.Department of Economics and Network for Studies on Pensions, Aging and Retirement (Netspar)Tilburg UniversityLE TilburgNetherlands
  3. 3.Economics DepartmentBank of LituaniaVilniusLithuania

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