As capital is projected to become a relatively abundant factor, the price of capital and therefore its rate of return are projected to fall, possibly leading to an asset meltdown after the initial rise in the stock market prices in the 1990s and 2000s often attributed to the size of the baby boom cohort (Poterba, 2001). [...] The Model The OLG model that we have built to analyse demographic change in a context of globalisation is composed of seven regions that make up the world economy: Canada, the United States, Japan, the European Union, China, India and the rest of the world (ROW). [...] In the following we describe some aspects of the production sector in each country, the household sector, the PAYG pensions systems, the government sector, and the trade in goods between countries. [...] 4 The rate of time preference and the intertemporal elasticity of substitution determine together the slope of the consumption profiles across age groups in the calibration of the model (where population is assumed stable) and this is also the slope of the consumption profile of an individual across his lifetime in the simulated model in absence of demographic shocks. [...] Conclusion and extensions This paper develops a multi-country overlapping-generations CGE model to gauge the long-term impact of population ageing in a context of globalisation of trade and capital flows among seven regions of the world: the USA, the EU, Canada, Japan, China, India, and a composite region representing the rest of the world.
- Pages
- 45
- Published in
- Canada
