2018年-CEPS欧洲政策研究中心_Population_Ageing_and_International_Capital_Flows_44页_2mb

Summary: Population Ageing and International Capital Flows

Core Content

This paper explores the relationship between population ageing and international capital flows, focusing on how demographic changes impact national savings, investment and government budgets, and how these, in turn, influence the flow of capital across countries.

Main Points

1. Population Ageing: A Global Phenomenon

• Trend: Population ageing, driven by lower fertility and higher life expectancy, is a global phenomenon.
• Key Differences:
  • Developed vs. Developing Countries: Ageing is more pronounced in developed countries (e.g., Japan, Europe) than in developing countries (e.g., Africa, Asia).
  • United States: Unlike Europe and Japan, the US has a relatively stable old-age dependency ratio due to higher fertility and slower demographic change.
• Projections:
  • The old-age dependency ratio is expected to increase across all regions, though the rate and magnitude vary.
  • In Japan and Europe, the ratio could reach 36% and 29%, respectively, by 2050.
  • In Africa, it is projected to rise to 7%, which is still relatively low.

2. Factors Behind Population Ageing

• Declining Fertility: Especially in poor countries, improving living standards lead to lower birth rates.
• Increasing Life Expectancy: Seen in both developing and developed countries, with medical advancements playing a key role.
• Baby Boom: A temporary increase in birth rates that leads to a surge in the elderly population as the boomers retire.

3. Population Ageing and Current Accounts

• Macro Identity: The current account (CA) is equal to the net savings of the private and public sectors.
• Equation:
  $$
  CA = S - I + T - G
  $$
  Where:
  • $S$ = Private savings
  • $I$ = Private investments
  • $T - G$ = Government budget surplus or deficit
• Channels of Impact:
  • Private Savings: Ageing is expected to reduce national savings rates, as older populations tend to save less.
  • Private Investments: The effect of ageing on investment is uncertain. It could reduce investment due to lower employment growth and capital deepening, but also increase it due to higher productivity from experienced workers.
  • Government Budget: Ageing increases public expenditures on pensions and healthcare, raising the tax burden on working generations.

4. Government Budget and Policies

• PAYG Systems: Pay-as-you-go pension systems place increasing pressure on government budgets as the elderly population grows.
• Public Expenditures: Expenditures on old-age pensions and healthcare are expected to rise significantly, especially in OECD countries.
• Policy Responses:
  • Increasing retirement age to reduce the financial burden.
  • Raising taxes or contributions now to create surpluses and reduce future debt.
  • These responses aim to increase national savings and reduce the burden on future generations.

5. International Capital Flows

• Capital Mobility: The paper examines the concept of capital mobility and the Feldstein-Horioka puzzle, which suggests that capital flows are limited across countries.
• North-South Flows: Ageing in developed countries may lead to capital flows to developing countries, which have younger populations and potentially higher returns on investment.
• Empirical Evidence: Capital flows are not perfect due to institutional and policy barriers, and the direction of flows is uncertain.

6. Effects of Lower Interest Rates

• Impact on Savings Policies: Lower interest rates can reduce the effectiveness of savings-enhancing policies.
• Example: The paper uses the Netherlands as an example to illustrate the effects of lower interest rates on funded pension systems and their ability to promote savings.

7. Policy Implications

• Need for Reform: Governments need to implement reforms to address the challenges of population ageing.
• Research Gaps: More theoretical and empirical research is needed to understand the complex relationship between population ageing, productivity and savings.
• Role of Capital Markets: International capital markets could play a crucial role in mitigating the economic effects of ageing, especially in developed countries that are likely to face lower savings rates.

Key Information

• Demographic Changes: Projected changes in the working-age population and old-age dependency ratios highlight the varying impacts across regions.
• Empirical Evidence: Figures and tables show the relationship between age structure and savings rates, as well as the effects of policy changes on public budgets.
• Policy Options: The paper discusses both funded pension systems and higher taxes as ways to increase national savings and reduce the burden of ageing.
• Capital Reallocation: There is potential for capital to flow from developed to developing countries as the latter offer better returns.

Conclusion

Population ageing has significant implications for national savings, investment and current accounts. It may lead to capital reallocation from developed to developing countries, but the effectiveness of such flows is limited by imperfect capital mobility and institutional differences. The paper emphasizes the need for better understanding of the interplay between demographics, savings and investment, and the role of policy in shaping international capital flows.