What Drives International Capital Flow? An Analysis of Demographic Effect of APEC Members

According to life-cycle theory,demographic age structure can affect savings and investment behavior.The effects of demographic structure on savings,investment and current account balance are featured by negative relationships with dependency ratios,but empirical literature has not reached a consensus.This paper tries to construct dynamic and static panel models and employs GMM,pooled OLS,fixed effects and SUR to analyze the panel data of 20 APEC members from 1993 to 2010.It comes to the conclusion that current account balance is significantly negatively related to demographic structure,which is robust,but the effects of demographic structure on savings and investment behavior are sensitive to the sample and methods.For internal demographic structure,the effect of elderly dependency ratio is robust with reverse coefficient from 0.26 to 0.33,and the effect of youth dependency ration is comparatively vague or weak.