Does an aging population influence stock markets? Evidence from New Zealand

Hettihewa, Samanthala and Saha, Shrabani and Zhang, Hanxiong (2018) Does an aging population influence stock markets? Evidence from New Zealand. Economic Modelling, 75 . pp. 142-158. ISSN 0264-9993

Full content URL: https://doi.org/10.1016/j.econmod.2018.06.017

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Abstract

The effect of the aging baby-boom-cohort on asset values is extensively studied. While that effect varies by country, there are likely to be commonalities. Thus, research on a relatively small advanced open economy like New Zealand can provide insight into the general effect. In this study monthly data from 1991-2017 is used to examine how aging population in New Zealand affects its stock market considering key demographic and non-demographic macroeconomic variables and a new focus on fast-and-slow-moving institutional change. The results suggest that the net effect of an aging population on stock markets is insignificant. However, real GDP and foreign portfolio investment (FPI) show a positive relationship with the stock market. The findings reveal that FPI can mitigate possible negative effects from aging in an open economy. Moreover, the policy implications of the study suggest that international-factor mobility, skilled-migration policies, and technology-based productivity growth can boost stock markets.

Keywords:Stock-prices, Baby-boomers, Demographics, Macroeconomic variables, New Zealand, time series
Subjects:N Business and Administrative studies > N300 Finance
L Social studies > L113 Economic Policy
L Social studies > L213 Socialism
L Social studies > L111 Financial Economics
L Social studies > L110 Applied Economics
N Business and Administrative studies > N321 Investment
Divisions:Lincoln International Business School
ID Code:32601
Deposited On:16 Jul 2018 09:25

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