The Role of Demography on Per Capita Output Growth and Saving Rates

Miguel Sanchez Romero, Max Planck Institute for Demographic Research

CGE models and "convergence models" differ in their assessment of the extent to which demography influences economic growth. In this paper, I show that CGE models produce results similar to those of convergence models when more detailed demographic information is used. To do so, I implement a CGE model to explain Taiwan's economic miracle during the period 1965-2005. I find that Taiwan's demographic transition accounts for 20.5% of per capita output growth and 16.6% of investment rate for the period 1965 2005. Moreover, this paper confirms most of the literature written on the role of demography on per capita output growth and saving rates since the seminar article by Coale and Hoover (1958).