Population Age Structure,Population Industrial Structure, And Current Account

The balance of international payments is one of the four major objectives of macroeconomic regulation and control, and the current account imbalance has become one of the most important macroeconomic issues which many scholars research and explore. With the arrival of the aging population, there has important practical significance for researching the effects of demographic changes on current account. Demographic structure not only includes the population age structure and population industrial structure. Through systematical reviewing and analyzing on the existing theoretical and empirical research, we find that the existing studies only focus on the population age structure changes, while ignoring the dynamic efeects that population industrial structure changes on current account. Therefore, in this paper, we study chiefly the dynamic afeects that population age structure and population industrial structure changes on current account.Firstly, this paper establishes a current account dynamic model containing both age structure and industrial of population based on the framework of OLQ and analyses the influence mechanism of two kinds of population structure changes on current account comprehensively based on this model. The model shows that:population age structure changes and population industrial structure changes will affect the current account through savings and investment channels; the decline of population dependency ratio will cause savings rate and investment rate rise together, while the relation between current account and population dependency ratio is uncertain, depending on the relative changes of savings rate and investment rate; the flow of labor to non-agriculture sector will cause savings rate and investment rate rise together, while the relation between current account and labor transfer is also ambiguous, depending on the relative changes of savings rate and investment rate.Then, this paper uses transnational panel data of120countries from1990to2011, testing the conclusions of the theoretical model from the whole. The empirical results show that:the savings rate, investment rate and current account all have significant inertia characteristics; the rise of child dependency ratio or the rise of elderly dependency ratio will lead to the decline in savings rate and investment rate, which lead to the deterioration of the current account; the flow of labor from agricultural sector to non-agricultural sector will result in the rise in the savings rate and investment rate, which improves current account.Finally, all samples were divided into high, middle, low income countries, and we test the conclusions of the theoretical model from the local, using transnational panel data of37high income countries,60middle income countries and23low income countries from1990to2011. The empirical results based on the panel data of37high income countries show that:the rise of child dependency ratio or the rise of elderly dependency ratio will lead to the decline in savings rate and investment rate, which lead to the deterioration of the current account; the flow of labor to non-agricultural sector will result in the rise in the savings rate and investment rate, which improves current account. The empirical results based on the panel data of60middle income countries show that: the rise of child dependency ratio or the rise of elderly dependency ratio will lead to the decline in savings rate and investment rate, which lead to the deterioration of the current account; population industrial structure changes will significantly affect current account, while affect the savings rate and investment rate insignificantly. The empirical results based on the panel data of23low income countries show that:child dependency ratio has no effect on savings rate, investment rate and current account; elderly dependency ratio has no effect on savings rate and investment rate, while affects investment rate significantly; population industrial structure will affect the current account through savings and investment channels.