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

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  • Hettihewa, Samanthala
  • Saha, Shrabani
  • Zhang, Hanxiong

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 to 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.

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  • Hettihewa, Samanthala & Saha, Shrabani & Zhang, Hanxiong, 2018. "Does an aging population influence stock markets? Evidence from New Zealand," Economic Modelling, Elsevier, vol. 75(C), pages 142-158.
    • Handle: RePEc:eee:ecmode:v:75:y:2018:i:c:p:142-158
    DOI: 10.1016/j.econmod.2018.06.017
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    2. Simo-Kengne, Beatrice D. & Riedel, Frank & Demeze-Jouatsa, Ghislain-Herman, 2022. "Demographic Changes and Asset Prices in an Overlapping Generations Model," Center for Mathematical Economics Working Papers 672, Center for Mathematical Economics, Bielefeld University.

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    More about this item

    Keywords

    Stock-prices; Baby-boomers; Demographics; Macroeconomic variables; New Zealand; Time series;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • F49 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Other

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