This paper studies the effect of demographic change on national saving, global interest rates, and international capital flows, focusing on the role of the public pension system. We develop a small open economy overlapping generations model to illustrate the channels through which demographic...

In an OLG (overlapping generations) economy with only two risky factors of production, human capital and physical capital, a social security system that optimally shares risks among generations was incorporated. By allowing for physical capital acumulation, this paper extends John Compbell's...