An A Study On The Impact Of The Demographic Change On The Current Account Adjust

Over the past three decades, the world’s population structure had changed dramatically, under the decreasing trend of the birth rate and the death rate, and the increasing trend of national life expectancy, the developed economics had already entered a high degree aging society, while the huge population base helped the developing economics still maintain a young population structure, at the same time with the development of globalized trade and investment, the imbalance of the current account between the developed economics and developing economics was also increasingly expanding, especially the coexist phenomenon that the emerging market economies like china maintain a huge current account surplus and the developed economies like United States maintain a huge current account deficit.In the first part of this paper, we described the trends of the world’s demographic change and the trends of the world’s current account variation in the past three decades, after that we discussed these trends in developed economies and developing economies respectively. Finally, from the perspective of statistics, we found that the demographic change indeed has an impact on the current account adjust.In the second part of this paper, we established a quantitative economics model used to explain the impact of demographic change on a country’s current account adjust, by means of mathematical derivation, we find that the variation of child dependency ratio, elderly dependency ratio, the number of young labor that entered the labor market and the number of mature labor has different effects on the variation of a country’s current account, finally we put forward four propositions that need to test in the later part.In the third part of this paper, we established an econometric model to analyze the impact of a country’s demographic change on a country’s current account trends, The empirical results showed that the child dependency ratio and the elderly dependency ratio has a negative impact on a country’s current account, the number of the young labor that enter the labor market and the number of the mature working-age population tended to improve a country’s current account, further studies showed that the impact of demographic change on current account was significant differences in developed economies and developing economies. Moreover, we find that the demographic variables have a more significant impact on current account in the long run, while the other control variables only significantly in the short term.In the last part of this paper, we concluded that the demographic change was indeed an important reason that can’t be ignored for the cumulative current account surplus of emerging developing economics. If the developing economies still maintain a high population growth rate while the population structure of developed economies maintain the aging trends. The phenomenon that the current account deficit existed in major developed countries while the current account surplus existed in developing countries will still continue.