DEMOGRAPHY, NATIONAL SAVINGS, AND INTERNATIONAL CAPITAL FLOWS

This paper addresses the relationship between age distribution, nation al savings and the current account balance. The results point to subst antial demographic effects, with increases in both the youth and old-a ge dependency ratios associated with lower savings rates. They also po int to differential effects on savings and investment, and thus to a r ole for demography in determining the current account balance. The est imated demographic effect on the current account balance exceeds six p er cent of GDP over the last three decades for a number of countries a nd, given expected demographic trends, is likely to be substantially l arger over the coming decades.