TITLE:
Demographics and Asset Markets: A Survey of the Literature
AUTHORS:
Wasanthi Thenuwara, Mahinda Siriwardana, Nam Hoang
KEYWORDS:
Ageing, Asset Prices, Asset Meltdown Hypothesis, Baby Boom, Demography, Demographic Structure
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.4,
June
14,
2017
ABSTRACT: This paper surveys the
theoretical and empirical literature examining the effects of population age
structure on financial asset prices, including critical reviews of the
methodologies used and an evaluation of contradictory results. The survey
focuses on the effects of the Baby Boom generation on asset prices, and in
particular, the question of the asset meltdown hypothesis (AMH). The existing
literature reveals that an asset meltdown may never eventuate nevertheless it
remains plausible that ageing of the Baby Boomers will have a significant
negative impact on asset prices. The previous studies were based on where the
proportion of the old age population is relatively low. With the first Baby
Boomers reaching 65 years of age in 2011 this proportion is projected to
increase substantially and hence the effect is reinforced. Thus new research is
needed to address the unresolved issues given that population ageing has
serious policy issues in the developed economies.