The Effect Of Aging On Savings And Capital Flows

With people born in the "baby boom" time slowly went into retirement, coupled with the improvement of people’s average life expectancy. The ratio of the elderly population to the total population in many countries has been increased. The United Nations population data in2012showed the world’s population aged65and above accounted for7.9%of the total population. According to the measure of aging country by seven percent of the standard, the whole world is an aging world now. However, each country during the stage of an aging population may not be the same, or a country at the aging of the population will experience different stages of the period, in these different stages during the aging of a country, the response of saving rates and capital flows would be different.Many scholars at home and abroad have been studying the effect of aging on national savings rate and capital flows, based on their findings, this paper divide the aging country into two categories, according to the different ration of population aged16-64to the total population, one is the aging country where the ration of the population aged15-64to the total population is in the decline stage, take Japan as an example. The other one is the aging country where the ration of the population aged15-64to the total population is in the stable stage, take France as an example. Through the establishment of the SVAR model. we collect the time series dates of the two countries from1990-2013on all relevant variables, empirically analysis in these two different types of aging countries, the impact on savings and current account balance as the elderly dependency ratio rises. It was found that the same proportion of the elderly population dependency ratio rises, savings rate for the first group of countries where share of the total population aged15-64in the downward phase dropped largely then for the second group of countries where share of the total population aged15-64in the stable phase, while the current balance for the second group of countries where share of the total population aged15-64in the stable phase dropped largely then for the first group of countries where share of the total population aged15-64in the declining phase.The conclusion of the study on an aging country experienced different stages of aging should develop appropriate policy responses are also a great help. For the drop in saving rate caused by population aging, and considering the aging problem in China, the article makes some suggestion on dealing with the population aging problem in China at the last part of the paper.This paper can be divided into four parts. The first part introduces the research background and significance of the paper, as well as related literature analysis, the research question of the article. The second section describes the status of the current world population aging, causes and classification and focuses on the relationship between savings, investment and capital flows, and discusses the impact of demographic changes on savings, investment and capital flows. In the third part we established a SVAR model, empirically analysis the impact of increased old dependency ration on the national saving rate and current account balances in two different type of country. In the fourth part we made a conclusion on the research result in this paper and made a policy suggestion to dampen the effect of population aging on the national saving rate and current account balances.