Template-Type: ReDIF-Paper 1.0
Author-Name: Igor Fedotenkov
Author-X-Name-First: Igor
Author-X-Name-Last: Fedotenkov
Author-Email: ifedotenkov@lb.lt
Author-Workplace-Name: Bank of Lithuania
Author-Name: Bas van Groezen
Author-X-Name-First: Bas
Author-X-Name-Last: Van Groezen
Author-Email: 
Author-Workplace-Name: Tilburg University
Author-Name: Lex Meijdam
Author-X-Name-First: Lex
Author-X-Name-Last: Meijdam
Author-Email: 
Author-Workplace-Name: Tilburg University

Title: International trade with pensions and demographic shocks
Abstract: The central question of this paper is how international trade and specialisation are affected by different designs of pension schemes and asymmetric demographic changes. In a model with two goods, two countries and two production factors, we find that countries with a relatively large unfunded pension scheme will specialise in the production of labour intensive goods. If these countries are hit by a negative demographic shock, this specialisation will intensify in the long run, which is contrary to the prediction of the classical Heckscher-Ohlin-Samuelson model. Eventually, these countries may even completely specialise in the production of those goods. The effects spill over to other countries, which will move away from complete specialisation in capital intensive goods as the relative size of their labour intensive goods sector will also increase. 

Classification-JEL: E27, F16, H55, J19
Keywords: demographics, international spillovers, pensions, trade, specialisation

Length: 32 pages
Number: 7
Note:
Creation-date: 2015-09-24
Price: Free
Publication-Status: 
File-URL: https://www.lb.lt/uploads/publications/docs/op_7.pdf
File-Format: Application/PDF
File-Function: Full text
Handle: RePEc:lie:opaper: 7