Effect of Aging Population on the Financial Markets
Abstract
The demographic questions have occupied for a few years an important place in the great debates of economic policy, in France as well as in the principal industrialized countries. In other words, all the large industrialized countries will know a considerable ageing of the population during the next decades. In the academic circles and the business press, they believe that the ageing of the population will have important effects on the financial markets following the impact awaited on the rates of saving and the request of the fund's investments. To develop the subject, we will initially present the various studies made by certain authors to justify the common claims according to which the demographic factors probably contributed to the recent movements of the values of credit, and they will have can be an important influence in the future. Then, we will continue by studying the impact of ageing on the financial markets and the economy referring to an econometric model showing the relation between the proportion of the old population of 65ans and more and certain financial variables. Therefore, how the changing volume of the segment affects the prices and the yield of the assets? Which is the impact of the population ageing on the money market? Would the development of the financial markets be largely the consequence of the population ageing?
Introduction and Literature Review
In a first part we will demonstrate how several economic models took an important place in the demographic studies and studied how the changing size of the segment affects the prices and the yield of the assets.
The three examples for such models, by chronological order, are: Yoo (1994a), Brooks (2002), and Geanakoplos, Magill and Quinzii (2004). All these models suggest that a demographic transition will affect the receipts of the capital market, although the size of the estimated values varies through the models.
Yoo (1994a) calibrates a model in which, the
The demographic questions have occupied for a few years an important place in the great debates of economic policy, in France as well as in the principal industrialized countries. In other words, all the large industrialized countries will know a considerable ageing of the population during the next decades. In the academic circles and the business press, they believe that the ageing of the population will have important effects on the financial markets following the impact awaited on the rates of saving and the request of the fund's investments. To develop the subject, we will initially present the various studies made by certain authors to justify the common claims according to which the demographic factors probably contributed to the recent movements of the values of credit, and they will have can be an important influence in the future. Then, we will continue by studying the impact of ageing on the financial markets and the economy referring to an econometric model showing the relation between the proportion of the old population of 65ans and more and certain financial variables. Therefore, how the changing volume of the segment affects the prices and the yield of the assets? Which is the impact of the population ageing on the money market? Would the development of the financial markets be largely the consequence of the population ageing?
Introduction and Literature Review
In a first part we will demonstrate how several economic models took an important place in the demographic studies and studied how the changing size of the segment affects the prices and the yield of the assets.
The three examples for such models, by chronological order, are: Yoo (1994a), Brooks (2002), and Geanakoplos, Magill and Quinzii (2004). All these models suggest that a demographic transition will affect the receipts of the capital market, although the size of the estimated values varies through the models.
Yoo (1994a) calibrates a model in which, the
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