Impact Of Population Age Structure On Asset Prices ——Empirical Evidence From Unbalanced Panel Data Of 56 Countries

Over the past half century,the age structure of the population,characterized by a decline in the birth rate and an increase in the average life expectancy,is an important cause of population aging.According to the estimates of the United Nations Population Division,the world has officially entered population aging society since 2002,and the deepening process of aging will be the main trend of the evolution of the age characteristics of the world population in the future.The impact of aging on society and economy is comprehensive.While affecting economic growth,its impact on financial markets has also received more and more attention.In today’s world,with increasing uncertainties,instability factors of the world economy and an aging process,how to deal with the economic impact of aging and maintain the stability of asset prices are two major issues that countries need to solve urgently.Based on this,this article uses the real stock price and real estate price to measure asset prices.It mainly studies the impact of age structure changes on the price of assets,and its systematic and in-depth research has certain guiding significance for the formulation of relevant policies.This article first focuses on the theoretical and empirical research on the relationship between the age structure of the population and asset prices.We find that there are some improvement we could make in the existing studies such as there are more single-country studies and less multi-country studies,the lack of systematic induction of the impact mechanism and possibility of refining model settings.After that,we direcly explore the relationship between the age structure of the population and the asset price using 12 representative countries’ data.Then a systematic theoretical analysis was made of the relationship between the population age structure and the asset prices.A theoretical framwork was constructed based on classic economic theories such as the life cycle hypothesis.Next,this paper analyzes the effect of population age structure on asset prices based on the perspectives of life cycle consumption and savings,life cycle investment and risk aversion hypothesis,neoclassical economic growth,and asset pricing.Then,the modified overlapping generation model is used to analyze the relationship between the age structure of the population and asst prices.The relationship was then derived mathematically.Finally,static and dynamic panel data models are constructed using data of 56 countries from 1973 to 2018 for empirical study,and robustness tests are performed through panel autoregressive distributed lag models,then we empirically explored the impact mechanism.The mechanism analysis believes that the impact of the age structure of the population on asset prices is not direct,but rather through the intermediary factors such as asset selection,risk aversion,total consumption,total savings,total investment,and labor input to affect asset supply and demand,and ultimately determine asset prices.Mathematical derivation shows that under other conditions unchanged,the proportion of the elderly population is negatively correlated with asset prices.The empirical results show that: under the control of real GDP growth rate,real interest rate,and the proportion of private credit provided by banks to GDP,there is a long-term negative correlation between the proportion of young people and stock prices,and there is no significant statistical relationship with real estate prices;The proportion of the prime saving population is significantly positively related to asset prices;the long-term effects of the proportion of the elderly population on stock prices and real estate prices are more sensitive to income levels,and the direction of impact on stock prices is not stable;it need some time to let the age structure of the population has an impact on asset prices;the age structure of the population mainly affects asset prices through interest rate channels.These provide empirical support for further improving of population-related and financial-related policies.Compared with the existing research,this paper makes five specific contributions to the literature.First,the overlapping generation model is further improved on the basis of predecessors.Second,the selection of multi-country data has enriched previous studies that used a single country or a small number of advanced economies as the research object,and helped to draw general conclusions that apply to different countries in the world.Third,using stock price index and real estate price index as proxy variables of asset prices has enriched the research on the impact of population age structure on the prices of different types of assets.Fourth,based on four perspectives,we analyze the different channels of population age structure that affect the asset prices,which enriches the theoretical mechanism research of the problem.Fifth,the panel autoregressive distributed lag model is used to test the robustness of the research conclusions,which improves the credibility of the conclusions.