Hostname: page-component-cd9895bd7-mkpzs Total loading time: 0 Render date: 2024-12-29T07:14:35.001Z Has data issue: false hasContentIssue false
  • English
  • Français

International trade with pensions and demographic shocks

Published online by Cambridge University Press:  24 August 2017

IGOR FEDOTENKOV ,
BAS VAN GROEZEN  and
LEX MEIJDAM
IGOR FEDOTENKOV
Affiliation:
International Research Laboratory for Institutional Analysis of Economic Reforms, CInSt, National Research University Higher School of Economics, and Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia (e-mail: [email protected])
BAS VAN GROEZEN
Affiliation:
Department of Economics and Network for Studies on Pensions, Aging and Retirement (Netspar), Tilburg University, PO Box 90153, 5000 LE Tilburg, Netherlands
LEX MEIJDAM
Affiliation:
Department of Economics and Network for Studies on Pensions, Aging and Retirement (Netspar), Tilburg University, PO Box 90153, 5000 LE Tilburg, Netherlands
Get access Rights & Permissions [Opens in a new window]

Abstract

The central question of this paper is how international trade and specialization are affected by different designs of pension schemes and asymmetric demographic changes. In a model with two goods, two countries and two production factors, we find that countries with a relatively large unfunded pension scheme will specialize in the production of labour intensive goods. If these countries are hit by a negative demographic shock, this specialization will intensify in the long run. Eventually, these countries may even completely specialize in the production of those goods. The effects spill over to other countries, which will move away from complete specialization in capital intensive goods as the relative size of their labour intensive goods sector will also increase.

Keywords

E27F11F16H55J19Demographicsinternational spilloverspensionstradespecialization
Type
Article
Information
Journal of Pension Economics & Finance , Volume 18 , Issue 1 , January 2019 , pp. 140 - 164
Copyright
Copyright © Cambridge University Press 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

We thank the participants of the Tilburg-Nagoya workshop on Population Economics and two anonymous referees for their useful comments.

References

Adema, Y., Meijdam, A. C., and Verbon, H. A. A. (2008) Beggar thy thrifty neighbour: the international spillover effects of pensions under population ageing. Journal of Population Economics, 21(4): 933–959.Google Scholar
Bajona, C. and Kehoe, T. (2010) Trade, growth, and convergence in a dynamic Heckscher-Ohlin model. Review of Economic Dynamics, 13: 487–513.Google Scholar
Baxter, M. (1992) Fiscal policy, specialization, and trade in the two-sector model: the return of Ricardo? Journal of Political Economy, 100(4): 713–744.Google Scholar
Börsch-Supan, A., Ludwig, A., and Winter, J. (2006) Ageing, pension reform, and capital flows: a multicountry simulation model. Economica, 73(292): 625–658.Google Scholar
Bouzahzah, M., Croix, D. and Docquier, F. (2002) Policy reforms and growth in computable OLG economies. Journal of Economic Dynamics & Control, 26: 2093–2113.Google Scholar
Buiter, W. H. (1981) Time preference and international lending and borrowing in an overlapping generations model. Journal of Political Economy, 89(4): 769–797.Google Scholar
Deardorff, A. and Hanson, J. (1978) Accumulation and a long-run Heckscher-Ohlin theorem. Economic Inquiry, 16: 288–292.Google Scholar
Engel, C. and Kletzer, K. (1989) Saving and investment in an open economy with non-traded goods. International Economic Review, 30(4): 735–752.Google Scholar
Findlay, R. (1970) Factor proportions and comparative advantage in the long run. Journal of Political Economy, 78: 27–34.Google Scholar
Fisher, R. (1992) Income distribution in the dynamic two-factor trade model. Economica, 59: 221–233.Google Scholar
Frenkel, J. A. and Razin, A. (1996) Fiscal Policies and Growth in the World Economy. Cambridge: MIT Press.Google Scholar
Fried, J. (1980) The intergenerational distribution of the gains from technical change and from international trade. Canadian Journal of Economics, 13(1): 65–81.Google Scholar
Galor, O. and Polemarchakis, H. M. (1987) Intertemporal equilibrium and the transfer paradox. Review of Economic Studies, 54(1): 147–156.Google Scholar
Gokcekus, O. and Tower, E. (1998) Does trade liberalization benefit young and old alike? Review of International Economics, 6(1): 50–58.Google Scholar
Howarth, R. B. (1998) An overlapping generations model of climate-economy interactions. Scandinavian Journal of Economics, 100(3): 575–591.Google Scholar
Ito, H. and Tabata, K. (2010) The spillover effects of population aging, international capital flows, and welfare. Journal of Population Economics, 23: 665–702.Google Scholar
Jermann, U. J. (1998) Asset pricing in production economies. Journal of Monetary Economics, 41(2): 257–275.Google Scholar
Kemp, M. C. and Wong, K. (1995) Gains from trade with overlapping generations. Economic Theory, 6(2): 283–303.Google Scholar
Kenc, T. and Sayan, S. (2001) Demographic shock transmission from large to small countries. An overlapping generations CGE analysis. Journal of Policy Modeling, 22: 677–702.Google Scholar
Kydland, F. E. and Prescott, E. C. (1982) Time-to-build and aggregate fluctuations. Econometrica, 50: 1345–1370.Google Scholar
Matsuyama, A. (1988) Life-cycle saving and comparative advantage in the long run. Economics Letters, 28: 375–379.Google Scholar
Mountford, A. (1998) Trade, convergence and overtaking. Journal of International Economics, 46: 167–182.Google Scholar
Mundell, R. (1957) International trade and factor mobility. American Economic Review, 47: 321–335.Google Scholar
Naito, T. and Zhao, L. (2009) Ageing, transitional dynamics, and gains from trade. Journal of Economic Dynamics & Control, 33: 1531–1542.Google Scholar
Oniki, H. and Uzawa, H. (1965) Patterns of trade and investment in a dynamic model of international trade. Review of Economic Studies, 32: 15–38.Google Scholar
Razin, A. and Sadka, E. (1992) International migration and international trade. NBER working paper series. Working paper No. 4230.Google Scholar
Rybczynsky, T. (1955) Factor endowment and relative commodity prices. Economica, 22: 336–341.Google Scholar
Samuelson, P. A. (1948) International trade and the equalisation of factor prices. Economic Journal, 58: 163–184.Google Scholar
Sayan, S. (2005) Heckscher-Ohlin revisited: implications of differential population dynamics for trade within an overlapping generations framework. Journal of Economic Dynamics & Control, 29: 1471–1493.Google Scholar
Serra, P. (1991) Short-run and long-run welfare implications of free trade. Canadian Journal of Economics, 24: 21–33.Google Scholar
Stiglitz, J. (1970). Factor price equalization in a dynamic economy. Journal of Political Economy, 78: 456–488.Google Scholar
Yakita, A. (2012) Different demographic changes and patterns of trade in a Heckscher-Ohlin setting. Journal of Population Economics, 25: 853–870.Google Scholar