Longer-term structural transitions and short-term macroeconomic adjustment: quantitative implications for the global financial system

Warwick McKibbin, David Vines

    Research output: Contribution to journalArticle


    This paper provides quantitative modelling of the effect of three longer-term global transitions: the global demographic transition involving a marked reduction in population growth; a long-term slowdown in productivity growth which may continue, or may conceivably be reversed; and the disruption in the global economy due to increasing climate shocks and the implementation of climate policies that will be needed to reach net-zero emissions by 2050. We study the global investment needs to which these transitions will lead. We demonstrate that these investment needs will be both asymmetric across countries and over time. This asymmetry will lead to potentially large changes in trade flows and significant financial capital flows across national borders, and also to substantial real exchange changes and interest rate movements. The resulting large movements in international capital flows will have significant implications for the global financial system, which we demonstrate at the country and regional level.
    Original languageEnglish
    Pages (from-to)245-266
    JournalOxford Review of Economic Policy
    Issue number2
    Publication statusPublished - 2023

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