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Effect of World Fertility Scenarios on International Living Standards
Author(s) -
GUEST ROSS S.,
MCDONALD IAN M.
Publication year - 2004
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2004.00179.x
Subject(s) - economics , standard of living , consumption (sociology) , fertility , rule of thumb , imperfect , capital (architecture) , relative price , international comparisons , total fertility rate , macroeconomics , economic growth , geography , market economy , population , sociology , computer science , family planning , research methodology , social science , linguistics , philosophy , demography , archaeology , algorithm
This paper applies a two good, multi‐region Ramsey‐Solow model of the world economy to determine the impact that alternative world fertility rates would have on international capital markets and living standards. Notable features of the model include: relative consumption demands and relative employment efficiencies that vary by age, traded and non‐traded goods, vintage technology, outward‐looking reference consumption, a proportion of non‐optimising rule‐of‐thumb consumers and imperfect capital mobility due to asymmetric information. The model suggests that projected demographic change will imply a flow of international capital from the ageing regions to the younger regions; and that the world interest rate will fall. The lower world interest rate will cause a loss in living standards for ageing regions, the lenders, and a gain for the younger regions, who are borrowers.