||Population aging and international capital movement: an overlapping-generation model approach
||Department of Economics
本文建構一疊代模型 (overlapping-generation model)，分別於封閉及開放經濟體系中分析台灣與日本兩國於人口高齡化下對總體經濟情況與資本流動之影響。於封閉經濟體系之研究結果顯示，在現行採用之隨收隨付制 (pay-as-you-go) 社會福利制度下，高齡化不僅對家計單位之儲蓄行為有負向影響，也同時加重了政府的財政負擔；隨之高齡化問題日益嚴重，年金制度與稅率制度的改革能有效改善政府財政赤字，並影響民眾之儲蓄行為。於資本可自由移動之開放經濟體系中，研究結果顯示高齡化問題導致兩國之家計單位儲蓄率下降，而資本由高齡化問題較為嚴重之國家流向輕度高齡化之國家，意味著資本將由日本流向台灣。藉此，本文證實政策制度的改革不僅能直接影響家計單位之經濟行為，也隨資本的自由移動間接影響台日兩國之經常帳與國際收支平衡。本文藉由該模型說明人口高齡化對總體經濟及國際資本流動之影響。
This paper analyzes the long-term dynamic effect of demographic change on international capital movement between Taiwan and Japan, by constructing a two-country multi-period overlapping generation model. In a closed economy setting, the simulation results illustrate that population aging has an adverse effect on saving motive and induces heavier fiscal burdens to the government under pay-as-you-go pension system. Considering the demographic change and existing welfare system, pension reform and tax reform play important roles on improving the government deficits and individuals’ saving behavior due to population aging. In an open economy setting, the simulation results indicate that aging leads to a reduction in savings in both countries. Besides, capital moves from aged economy to aging economy, namely, from Japan to Taiwan. However, fiscal policy does not only have direct effect on individual economic behavior, but also affects current account and trade balance indirectly. Finally, this study shows the impact of population aging on macroeconomics and its effect on international capital flow.
Chapter 1. Introduction 1
Chapter 2. Literature Review 6
2.1 Population aging and international capital movement 7
2.2 Population aging, capital flows and social security system 9
2.3 The related research within Asian economies 10
Chapter 3. The model and parameterization 11
3.1 The model 11
3.1.1 Household sector 11
3.1.2 Firm sector 15
3.1.3 Pension System 15
3.1.4 Government sector 16
3.1.5 Foreign sector 18
3.1.6 The equilibrium condition 19
3.2 Parameterization of the model 19
3.2.1 Endogenous variables under five sectors 20
3.2.2 Exogenous variables 24
Chapter 4. Simulation results: A closed economy scenario 25
4.1 Baseline simulation in Taiwan and Japan 25
4.2 Policy analysis in Taiwan 29
4.2.1 Pension reform 29
4.2.2 The change of individual preference 31
4.2.3 Tax reform 35
4.3 Policy analysis in Japan 38
4.3.1 Pension reform 38
4.3.2 Tax reform 42
Chapter 5. Simulation results: An open economy scenario 45
5.1 Baseline simulation 45
5.2 Policy analysis 48
Chapter 6. Conclusion 52
Data source 59
List of Tables
Table 3-1. Parameters from Taiwan and Japan in this model 20
Table 4-1. The change of parameter values in different cases in Taiwan 29
Table 4-2. The change of parameter values in different cases in Japan 38
Table 5-1. The change of parameter values in different cases under open economy 48
List of Figures
Figure 1-1. Old dependency ratio in East Asia 2
Figure 1-2. The ratio of foreign trade with Taiwan in Asia 2
Figure 1-3. Economic circular flow diagram 3
Figure 1-4. Population in Taiwan, 1950 to 2060 4
Figure 1-5. The framework of this study 5
Figure 2-1. A schematic diagram of overlapping-generation model 6
Figure 3-1. Bond issuance rate in Taiwan 22
Figure 3-2. Wage profile in Taiwan and Japan 23
Figure 4-1. Baseline results in Taiwan (A closed economy scenario) 27
Figure 4-2. Baseline results in Japan (A closed economy scenario) 28
Figure 4-3. Pension system structure in Taiwan- change in replacement ratio 32
Figure 4-4. Pension system structure in Taiwan-change in pension contribution rate 33
Figure 4-5. A change of individual’s preference in Taiwan 34
Figure 4-6. Tax reform in Taiwan- change in income tax rate 36
Figure 4-7. Tax reform in Taiwan- change in capital tax rate 37
Figure 4-8. Pension system structure in Japan- change in replacement ratio 40
Figure 4-9. Pension system structure in Japan- change in pension contribution rate 41
Figure 4-10. Tax reform in Japan- change in income tax rate 43
Figure 4-11. Tax reform in Japan- change in capital tax rate 44
Figure 5-1. Baseline results in Taiwan and Japan (An open economy scenario) 47
Figure 5-2. Tax reform- increase income tax rate in Taiwan 50
Figure 5-3. Tax reform- decrease income tax rate in Japan 51
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2. Data source
AREMOS database of economics and statistics from Taiwan Economic Data Center. http://net.aremos.org.tw/
Historical population statistic from Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. http://www.stat.gov.tw/mp.asp?mp=4
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