Edited by Paolo Onofri
Chapter 8: Incorporating demographic change in multi-country macroeconomic models: some preliminary results*
Ralph C. Bryant and Warwick J. McKibbin 1. INTRODUCTION Population ageing is occurring at diﬀering paces and with diﬀering degrees of intensity in the industrialized nations of the world. Signiﬁcant ageing is already under way, for example, in Japan, Italy and Germany. Major demographic changes in the United States and Canada will begin in the second decade of the twenty-ﬁrst century. With a still longer lag, the demographic trends will be manifest in developing economies as well. These changes in the demographic structure of populations will have major economic and political consequences. Government budgets, for example, will come under severe pressure. The levels of saving and investment and the overall saving–investment balance will change signiﬁcantly in many regions of the world economy. These changes will be associated with large changes in cross-border ﬂows of ﬁnancial funds and goods. Whatever the proximate impetus for the changes, major adjustments in exchange rates and balance-of-payments positions will be required. The resulting international tensions will add greatly to the complications faced by national governments as they try to cope with the pressures on their domestic ﬁscal budgets and appropriately revise their economic policies. The Brookings Institution has under way a major program to study issues of population ageing. As a part of this program, the two authors have organized a project on the Global Dimensions of Demographic Change. The ﬁrst product of the project was a series of workshops taking stock of what the economics profession does and...
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