Capital Will Not Become More Expensive as the World Ages
Aging of populations and convergence between developed and developing countries in per capita incomes are shaping the evolution of saving, investment, capital flows, and, in particular, the cost of capital. When considering these trends, the existi...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank Group, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2014/07/19899048/capital-not-more-expensive-world-ages http://hdl.handle.net/10986/19385 |
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okr-10986-19385 |
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oai_dc |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English en_US |
| topic |
ACCELERATOR ACCESS TO CREDIT ACCOUNTING AFFILIATED ORGANIZATIONS AGRICULTURAL SECTOR AGRICULTURE BALANCE OF PAYMENTS BENCHMARK BIASES BID BORROWER BUSINESS INVESTMENT CAPITAL ACCUMULATION CAPITAL ALLOCATION CAPITAL FLOW CAPITAL FLOWS CAPITAL FORMATION CAPITAL INFLOWS CAPITAL MARKET CAPITAL STOCK CAPITAL STOCKS CAPITAL THEORY CHECKS COMMODITY COMMUNICATIONS TECHNOLOGY CONSUMER DEMAND CONSUMPTION FUNCTION CONSUMPTION SMOOTHING CORPORATE FINANCING CORRUPTION COST OF CAPITAL COUNTRY CAPITAL COUNTRY RISK CREDIT NEED CROSS-BORDER CAPITAL CROSS-BORDER FLOWS CURRENT ACCOUNT CURRENT ACCOUNT BALANCES CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT DEFICITS CURRENT ACCOUNTS DEFICITS DEMAND FOR CAPITAL DEMOCRATIC ACCOUNTABILITY DEMOGRAPHIC DEMOGRAPHIC CHANGE DEMOGRAPHIC CHANGES DEMOGRAPHIC EFFECTS DEMOGRAPHIC PROFILES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DEVELOPMENT POLICY DISTRIBUTION OF WEALTH DOMESTIC FINANCIAL MARKETS DOMESTIC INVESTMENT DOMESTIC SAVING DUMMY VARIABLES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC MODELS ECONOMIC OUTLOOK ECONOMIC POLICY ECONOMIC STRUCTURE ELASTICITY ELASTICITY OF SUBSTITUTION ENDOWMENTS EQUATIONS EQUILIBRIUM EXCESS DEMAND EXCHANGE RATE EXCHANGE RATES EXOGENOUS VARIABLES EXPECTED RETURNS FINANCIAL ASSETS FINANCIAL DEVELOPMENT FINANCIAL GLOBALIZATION FINANCIAL INSTRUMENTS FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL PORTFOLIOS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCING OF INVESTMENT FIXED INVESTMENT FOREIGN ASSET FOREIGN ASSET POSITION FUTURE RESEARCH GDP GLOBAL CAPITAL GLOBAL CAPITAL FLOWS GLOBAL CAPITAL MARKETS GLOBAL ECONOMIC PROSPECTS GLOBAL ECONOMICS GLOBAL ECONOMY GLOBAL INVESTMENT GLOBAL OUTPUT GLOBAL TRADE GLOBALIZATION GOVERNMENT EXPENDITURES GOVERNMENT SAVING GROWTH RATE GROWTH RATES HOUSEHOLD SAVING HOUSEHOLDS INCOME INCOME GROUP INCOME GROUPS INCOME GROWTH INCOMES INDUSTRIAL COUNTRIES INFLOWS OF CAPITAL INSTRUMENT INSURANCE INTEREST RATE INTEREST RATE DIFFERENTIALS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL FLOWS INTERNATIONAL CAPITAL MARKETS INTERNATIONAL INVESTOR INTERNATIONAL TRADE INVESTMENT ACTIVITY INVESTMENT BEHAVIOR INVESTMENT CLIMATE INVESTMENT FINANCING INVESTMENT FLOWS INVESTMENT FUNCTION INVESTMENT FUNCTIONS INVESTMENT GROWTH INVESTMENT NEEDS INVESTMENT OPPORTUNITIES INVESTMENT PATTERNS INVESTMENT PROJECTS INVESTMENT PURPOSES INVESTMENT RATE INVESTMENT RATES INVESTMENT SPENDING KEYNESIAN ECONOMICS LABOR FORCE PARTICIPATION LDCS LENDER LIFE CYCLE HYPOTHESIS LIQUIDITY LIQUIDITY CONSTRAINTS LOAN LOANABLE FUNDS LONG-TERM INTEREST LONG-TERM INTEREST RATES LOW INTEREST RATES MACROECONOMIC MODELS MACROECONOMICS MARGINAL PRODUCT MARKET DISTORTIONS MONETARY FUND NATIONAL INCOME NATURAL RESOURCE NET CAPITAL PENSION PENSION REFORM PENSION REFORMS PER CAPITA INCOME PER CAPITA INCOMES PERMANENT INCOME POLITICAL ECONOMY PORTFOLIO PORTFOLIO ALLOCATION PORTFOLIOS POTENTIAL OUTPUT PRICE FLUCTUATIONS PRIVATE INVESTMENT PRIVATE SAVING PRODUCTION FUNCTIONS PRODUCTIVE CAPITAL PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICY RAPID GROWTH RATE OF GROWTH RATE OF RETURN RATE OF RETURN TO CAPITAL RATES OF RETURN RATES OF RETURNS REAL GDP REAL GROWTH RATE REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REAL RATE OF RETURN SAVINGS SOCIAL PROTECTION SOCIAL SAFETY NET SOCIAL SECURITY TAX TAX POLICY TRADE BALANCES URUGUAY ROUND UTILITY FUNCTION WORLD DEVELOPMENT INDICATORS WORLD ECONOMY WORLD TRADE WORLD TRADE ORGANIZATION |
| spellingShingle |
ACCELERATOR ACCESS TO CREDIT ACCOUNTING AFFILIATED ORGANIZATIONS AGRICULTURAL SECTOR AGRICULTURE BALANCE OF PAYMENTS BENCHMARK BIASES BID BORROWER BUSINESS INVESTMENT CAPITAL ACCUMULATION CAPITAL ALLOCATION CAPITAL FLOW CAPITAL FLOWS CAPITAL FORMATION CAPITAL INFLOWS CAPITAL MARKET CAPITAL STOCK CAPITAL STOCKS CAPITAL THEORY CHECKS COMMODITY COMMUNICATIONS TECHNOLOGY CONSUMER DEMAND CONSUMPTION FUNCTION CONSUMPTION SMOOTHING CORPORATE FINANCING CORRUPTION COST OF CAPITAL COUNTRY CAPITAL COUNTRY RISK CREDIT NEED CROSS-BORDER CAPITAL CROSS-BORDER FLOWS CURRENT ACCOUNT CURRENT ACCOUNT BALANCES CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT DEFICITS CURRENT ACCOUNTS DEFICITS DEMAND FOR CAPITAL DEMOCRATIC ACCOUNTABILITY DEMOGRAPHIC DEMOGRAPHIC CHANGE DEMOGRAPHIC CHANGES DEMOGRAPHIC EFFECTS DEMOGRAPHIC PROFILES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DEVELOPMENT POLICY DISTRIBUTION OF WEALTH DOMESTIC FINANCIAL MARKETS DOMESTIC INVESTMENT DOMESTIC SAVING DUMMY VARIABLES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC MODELS ECONOMIC OUTLOOK ECONOMIC POLICY ECONOMIC STRUCTURE ELASTICITY ELASTICITY OF SUBSTITUTION ENDOWMENTS EQUATIONS EQUILIBRIUM EXCESS DEMAND EXCHANGE RATE EXCHANGE RATES EXOGENOUS VARIABLES EXPECTED RETURNS FINANCIAL ASSETS FINANCIAL DEVELOPMENT FINANCIAL GLOBALIZATION FINANCIAL INSTRUMENTS FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL PORTFOLIOS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCING OF INVESTMENT FIXED INVESTMENT FOREIGN ASSET FOREIGN ASSET POSITION FUTURE RESEARCH GDP GLOBAL CAPITAL GLOBAL CAPITAL FLOWS GLOBAL CAPITAL MARKETS GLOBAL ECONOMIC PROSPECTS GLOBAL ECONOMICS GLOBAL ECONOMY GLOBAL INVESTMENT GLOBAL OUTPUT GLOBAL TRADE GLOBALIZATION GOVERNMENT EXPENDITURES GOVERNMENT SAVING GROWTH RATE GROWTH RATES HOUSEHOLD SAVING HOUSEHOLDS INCOME INCOME GROUP INCOME GROUPS INCOME GROWTH INCOMES INDUSTRIAL COUNTRIES INFLOWS OF CAPITAL INSTRUMENT INSURANCE INTEREST RATE INTEREST RATE DIFFERENTIALS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL FLOWS INTERNATIONAL CAPITAL MARKETS INTERNATIONAL INVESTOR INTERNATIONAL TRADE INVESTMENT ACTIVITY INVESTMENT BEHAVIOR INVESTMENT CLIMATE INVESTMENT FINANCING INVESTMENT FLOWS INVESTMENT FUNCTION INVESTMENT FUNCTIONS INVESTMENT GROWTH INVESTMENT NEEDS INVESTMENT OPPORTUNITIES INVESTMENT PATTERNS INVESTMENT PROJECTS INVESTMENT PURPOSES INVESTMENT RATE INVESTMENT RATES INVESTMENT SPENDING KEYNESIAN ECONOMICS LABOR FORCE PARTICIPATION LDCS LENDER LIFE CYCLE HYPOTHESIS LIQUIDITY LIQUIDITY CONSTRAINTS LOAN LOANABLE FUNDS LONG-TERM INTEREST LONG-TERM INTEREST RATES LOW INTEREST RATES MACROECONOMIC MODELS MACROECONOMICS MARGINAL PRODUCT MARKET DISTORTIONS MONETARY FUND NATIONAL INCOME NATURAL RESOURCE NET CAPITAL PENSION PENSION REFORM PENSION REFORMS PER CAPITA INCOME PER CAPITA INCOMES PERMANENT INCOME POLITICAL ECONOMY PORTFOLIO PORTFOLIO ALLOCATION PORTFOLIOS POTENTIAL OUTPUT PRICE FLUCTUATIONS PRIVATE INVESTMENT PRIVATE SAVING PRODUCTION FUNCTIONS PRODUCTIVE CAPITAL PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICY RAPID GROWTH RATE OF GROWTH RATE OF RETURN RATE OF RETURN TO CAPITAL RATES OF RETURN RATES OF RETURNS REAL GDP REAL GROWTH RATE REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REAL RATE OF RETURN SAVINGS SOCIAL PROTECTION SOCIAL SAFETY NET SOCIAL SECURITY TAX TAX POLICY TRADE BALANCES URUGUAY ROUND UTILITY FUNCTION WORLD DEVELOPMENT INDICATORS WORLD ECONOMY WORLD TRADE WORLD TRADE ORGANIZATION Bussolo, Maurizio Lim, Jamus Jerome Maliszewska, Maryla Timmer, Hans Capital Will Not Become More Expensive as the World Ages |
| relation |
Policy Research Working Paper;No. 6989 |
| description |
Aging of populations and convergence
between developed and developing countries in per capita
incomes are shaping the evolution of saving, investment,
capital flows, and, in particular, the cost of capital. When
considering these trends, the existing literature argues for
either continued, low interest rates, or sharply rising
ones. This paper presents an alternative view: modest rises
in interest rates, which result from a combination of
increases in the global weight of high-saving developing
economies (limiting declines in global saving), and
decelerations in the rate of growth in developing countries
(constraining upward pressure in global investment). For the
majority of countries, slowing capital demand resulting from
decelerating growth, coupled with structural changes that
influence its attractiveness as a destination for capital,
moderate increases in interest rates. Changes in key
assumptions do not alter this view. More specifically, the
small rise in interest rates persists even in a scenario
where growth in developing countries decelerates more
slowly, or when elasticities governing the behavior of
saving and investment are varied. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Bussolo, Maurizio Lim, Jamus Jerome Maliszewska, Maryla Timmer, Hans |
| author_facet |
Bussolo, Maurizio Lim, Jamus Jerome Maliszewska, Maryla Timmer, Hans |
| author_sort |
Bussolo, Maurizio |
| title |
Capital Will Not Become More Expensive as the World Ages |
| title_short |
Capital Will Not Become More Expensive as the World Ages |
| title_full |
Capital Will Not Become More Expensive as the World Ages |
| title_fullStr |
Capital Will Not Become More Expensive as the World Ages |
| title_full_unstemmed |
Capital Will Not Become More Expensive as the World Ages |
| title_sort |
capital will not become more expensive as the world ages |
| publisher |
World Bank Group, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2014/07/19899048/capital-not-more-expensive-world-ages http://hdl.handle.net/10986/19385 |
| _version_ |
1764443834066927616 |
| spelling |
okr-10986-193852021-04-23T14:03:52Z Capital Will Not Become More Expensive as the World Ages Bussolo, Maurizio Lim, Jamus Jerome Maliszewska, Maryla Timmer, Hans ACCELERATOR ACCESS TO CREDIT ACCOUNTING AFFILIATED ORGANIZATIONS AGRICULTURAL SECTOR AGRICULTURE BALANCE OF PAYMENTS BENCHMARK BIASES BID BORROWER BUSINESS INVESTMENT CAPITAL ACCUMULATION CAPITAL ALLOCATION CAPITAL FLOW CAPITAL FLOWS CAPITAL FORMATION CAPITAL INFLOWS CAPITAL MARKET CAPITAL STOCK CAPITAL STOCKS CAPITAL THEORY CHECKS COMMODITY COMMUNICATIONS TECHNOLOGY CONSUMER DEMAND CONSUMPTION FUNCTION CONSUMPTION SMOOTHING CORPORATE FINANCING CORRUPTION COST OF CAPITAL COUNTRY CAPITAL COUNTRY RISK CREDIT NEED CROSS-BORDER CAPITAL CROSS-BORDER FLOWS CURRENT ACCOUNT CURRENT ACCOUNT BALANCES CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT DEFICITS CURRENT ACCOUNTS DEFICITS DEMAND FOR CAPITAL DEMOCRATIC ACCOUNTABILITY DEMOGRAPHIC DEMOGRAPHIC CHANGE DEMOGRAPHIC CHANGES DEMOGRAPHIC EFFECTS DEMOGRAPHIC PROFILES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DEVELOPMENT POLICY DISTRIBUTION OF WEALTH DOMESTIC FINANCIAL MARKETS DOMESTIC INVESTMENT DOMESTIC SAVING DUMMY VARIABLES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC MODELS ECONOMIC OUTLOOK ECONOMIC POLICY ECONOMIC STRUCTURE ELASTICITY ELASTICITY OF SUBSTITUTION ENDOWMENTS EQUATIONS EQUILIBRIUM EXCESS DEMAND EXCHANGE RATE EXCHANGE RATES EXOGENOUS VARIABLES EXPECTED RETURNS FINANCIAL ASSETS FINANCIAL DEVELOPMENT FINANCIAL GLOBALIZATION FINANCIAL INSTRUMENTS FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL PORTFOLIOS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCING OF INVESTMENT FIXED INVESTMENT FOREIGN ASSET FOREIGN ASSET POSITION FUTURE RESEARCH GDP GLOBAL CAPITAL GLOBAL CAPITAL FLOWS GLOBAL CAPITAL MARKETS GLOBAL ECONOMIC PROSPECTS GLOBAL ECONOMICS GLOBAL ECONOMY GLOBAL INVESTMENT GLOBAL OUTPUT GLOBAL TRADE GLOBALIZATION GOVERNMENT EXPENDITURES GOVERNMENT SAVING GROWTH RATE GROWTH RATES HOUSEHOLD SAVING HOUSEHOLDS INCOME INCOME GROUP INCOME GROUPS INCOME GROWTH INCOMES INDUSTRIAL COUNTRIES INFLOWS OF CAPITAL INSTRUMENT INSURANCE INTEREST RATE INTEREST RATE DIFFERENTIALS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL FLOWS INTERNATIONAL CAPITAL MARKETS INTERNATIONAL INVESTOR INTERNATIONAL TRADE INVESTMENT ACTIVITY INVESTMENT BEHAVIOR INVESTMENT CLIMATE INVESTMENT FINANCING INVESTMENT FLOWS INVESTMENT FUNCTION INVESTMENT FUNCTIONS INVESTMENT GROWTH INVESTMENT NEEDS INVESTMENT OPPORTUNITIES INVESTMENT PATTERNS INVESTMENT PROJECTS INVESTMENT PURPOSES INVESTMENT RATE INVESTMENT RATES INVESTMENT SPENDING KEYNESIAN ECONOMICS LABOR FORCE PARTICIPATION LDCS LENDER LIFE CYCLE HYPOTHESIS LIQUIDITY LIQUIDITY CONSTRAINTS LOAN LOANABLE FUNDS LONG-TERM INTEREST LONG-TERM INTEREST RATES LOW INTEREST RATES MACROECONOMIC MODELS MACROECONOMICS MARGINAL PRODUCT MARKET DISTORTIONS MONETARY FUND NATIONAL INCOME NATURAL RESOURCE NET CAPITAL PENSION PENSION REFORM PENSION REFORMS PER CAPITA INCOME PER CAPITA INCOMES PERMANENT INCOME POLITICAL ECONOMY PORTFOLIO PORTFOLIO ALLOCATION PORTFOLIOS POTENTIAL OUTPUT PRICE FLUCTUATIONS PRIVATE INVESTMENT PRIVATE SAVING PRODUCTION FUNCTIONS PRODUCTIVE CAPITAL PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICY RAPID GROWTH RATE OF GROWTH RATE OF RETURN RATE OF RETURN TO CAPITAL RATES OF RETURN RATES OF RETURNS REAL GDP REAL GROWTH RATE REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REAL RATE OF RETURN SAVINGS SOCIAL PROTECTION SOCIAL SAFETY NET SOCIAL SECURITY TAX TAX POLICY TRADE BALANCES URUGUAY ROUND UTILITY FUNCTION WORLD DEVELOPMENT INDICATORS WORLD ECONOMY WORLD TRADE WORLD TRADE ORGANIZATION Aging of populations and convergence between developed and developing countries in per capita incomes are shaping the evolution of saving, investment, capital flows, and, in particular, the cost of capital. When considering these trends, the existing literature argues for either continued, low interest rates, or sharply rising ones. This paper presents an alternative view: modest rises in interest rates, which result from a combination of increases in the global weight of high-saving developing economies (limiting declines in global saving), and decelerations in the rate of growth in developing countries (constraining upward pressure in global investment). For the majority of countries, slowing capital demand resulting from decelerating growth, coupled with structural changes that influence its attractiveness as a destination for capital, moderate increases in interest rates. Changes in key assumptions do not alter this view. More specifically, the small rise in interest rates persists even in a scenario where growth in developing countries decelerates more slowly, or when elasticities governing the behavior of saving and investment are varied. 2014-08-15T18:54:34Z 2014-08-15T18:54:34Z 2014-07 http://documents.worldbank.org/curated/en/2014/07/19899048/capital-not-more-expensive-world-ages http://hdl.handle.net/10986/19385 English en_US Policy Research Working Paper;No. 6989 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Group, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |