This item is non-discoverable
Margaret Davenport
Former Member
Last Name
Davenport
First name
Margaret
Phone
+41 71 224 2387
1 results
Now showing 1 - 1 of 1
- Some of the metrics are blocked by yourconsent settings
Item type:Publication, Demography, Capital Flows and International Portfolio Choice over the Life-cycle(2016); Mann, KatjaIn an aging world, how does a country's demographic structure impact global trades in safe and risky assets and their respective prices? We answer these questions combining portfolio choice over the life-cycle with a two-region, general equilibrium model. We show that when one region is aging faster than the other, its demand for both safe and risky assets increases, whereas a greater portfolio share is allocated into safe assets. Absent perfectly elastic supply, this results in a change in autarky rates and, in an open economy, in international asset trades. Calibrating the model to the U.S. and Europe, we predict a positive net external equity position and a negative net external debt position for the U.S. The model allows us to quantitatively assess the impact of demographic change on trade in various types of assets, whereas previously, the focus has been on aggregate capital flows. In addition, general equilibrium price effects can explain a significant portion of the valuation effects present in international foreign asset positions.Type:working paper