The Impact of Macroeconomic Influence on Retirement Investments: A Case Study of New Zealand

Hettihewa, S and Saha, Shrabani and Zhang, Hanxiong (2018) The Impact of Macroeconomic Influence on Retirement Investments: A Case Study of New Zealand. In: New Zealand Association of Economists Conference Auckland University of Technology, 27-29 June 2018, New Zealand.

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The Impact of Macroeconomic Influence on Retirement Investments: A Case Study of New Zealand
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Abstract

This study investigates how aging populations affect stock prices in New Zealand, in particular, the
effect of the 50-64 cohort moving from their peak investment decade into disinvestment from a dynamic
perspective by considering fast- and slow-moving institutional changes for the period 1991-2017. A
scientific LASSO approach is used to select macroeconomic variables which affect stock prices. The
findings suggest that fast-moving institutional changes are mostly associated with unexpected market
shocks rather than policy changes in terms of timing. Furthermore, there exists a long-run relationship
between stock prices and aging population with the influence of other macroeconomic factors.
However, aging population does not affect stock prices negatively, rejecting the predictions of LifeCycle
and Permanent Income Hypotheses. The findings reveal that policies seeking to mitigate a stockmarket
meltdown may be superfluous if the macroeconomic factors (such as real GDP and money
supply) are ignored

Keywords:Aging demography, Institutional changes, Macroeconomic variables, Stock market, Structural breaks, New Zealand
Subjects:N Business and Administrative studies > N120 International Business studies
N Business and Administrative studies > N100 Business studies
Divisions:Lincoln International Business School
ID Code:33626
Deposited On:09 Oct 2018 14:56

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