The Research About The Impact Of Aging Population To Current Account In China

At present, the development of the world economy is faced the threat from theimbalance of the current account, and the scholars is beginning to question thesustainability of this problem. So it is necessary to analyze what factors influence thechanges of the current account. In reality, the age structure is different in differentregions, even at the same time, it is also true that there are some differences in the agestructure in different regions. Because of the impact of the age structure on savingsand investment, and the current account is affected by the savings and investment, it isobvious that the current account is affected by the age structure. This article launchesthe research on the effect on current account from aging population.After analyzing the massive domestic and foreign literatures about the agestructure and the current account, the author defines the meaning of some importantconcepts at first, then reviews the theory about demographic transition and thehypothesis of life cycle. Next, based on the brief analysis of three stages from theperspective of age structure of population, the author discusses about how agingpopulation influence the current account according to national income accountsidentity. Through the analysis, conclusions involve that aging population has effect onsavings, consumption, investment, government expenditures and export, which haveinfluences on current account finally.The article also analyzes the development history and the future trend of agingpopulation and current account briefly, from which the author discusses the influencesfrom aging problem on current account. Based on these theory and research, theauthor establishes an econometric model and uses the panel data of thirty provincesfrom2000to2010to do the empirical test. In the process of choosing variables, somefactors that affect current account are also chosen as control variables besides someindexes such as dependency ratio of elderly. After doing the redundant fixed effectstests and hausman test, it’s found that the fixed effect model is suitable for theestimation. The empirical results show that the correlation between aging populationand the current account is negative.This paper also choose the lag two of the elderlydependency ratio to be the variable and do the regression analysis,which is in order todo the endogenous test of the elderly dependency ratio.Finally, on the basis of the study, the results get some enlightenments that multi-national investment using current account surplus or abundant capital hasstrategic significance to the increasingly serious aging problem. And because of theincreasing of the aging population, the trend of the surplus of the current account isgradually weakened; this has certain reference significance to the population policyand the appreciation of the RMB.