Working Paper: CEPR ID: DP4644
Authors: David Domeij; Martin Flodn
Abstract: We use the neoclassical growth framework to model international capital flows in a world with exogenous demographic change. We compare model implications and actual current account data and find that the model explains a small but significant fraction of capital flows between OECD countries, in particular after 1985.
Keywords: current account; demographics; Feldstein-Horioka puzzle; international capital mobility
JEL Codes: E22; F21; F41; F47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Demographic changes (J11) | Saving rates (E43) |
| Saving rates (E43) | Investment rates (G31) |
| Investment rates (G31) | Capital flows (F32) |
| Age structure (J11) | Saving rates (E43) |
| Fraction of prime-age workers (J49) | Saving rates (E43) |
| Demographic shifts (J11) | Capital mobility (F20) |
| Demographic changes (J11) | Capital flows (F32) |