The Global Macroeconomic Consequences of a Demographic Transition

The world is in the midst of a significant demographic transition with potential implications for the macroeconomic performance of the global economy. This paper summarizes the key features of current and projected demographic change. It then applies a new 10-region global model (an extended version of the MSG-Cubed model) incorporating demographic dynamics, to examine the consequences of projected global demographic change on the world economy from 2005 to 2050. A distinction is made between the effects on each country of its own demographic transition and the effects on each country of demographic changes occurring in the rest of the world. (c) 2006 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.