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Demographic transition and the real exchange rate in Australia: An empirical investigation

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  • Kamrul Hassan
  • Ruhul Salim
  • Harry Bloch

Abstract

This article utilizes the empirical findings that age structure of the population affects saving, investment and capital flow and hypothesizes that age structure influences the real exchange rate. Based on this link, an empirical model is specified for Australia and estimated with annual data for the period 1970-2011. An autoregressive distributed lag model of cointegration indicates that Australia's real exchange rate is cointegrated with its productivity differential and the relative share of young dependents (0-14 years) in the population. Long-run estimates show that young cohort has an appreciating influence on the real exchange rate. Also, the short-run adjustment is substantial, with more than 65% of the disequilibrium corrected in a year.

Suggested Citation

  • Kamrul Hassan & Ruhul Salim & Harry Bloch, 2015. "Demographic transition and the real exchange rate in Australia: An empirical investigation," New Zealand Economic Papers, Taylor & Francis Journals, vol. 49(1), pages 62-77, April.
    • Handle: RePEc:taf:nzecpp:v:49:y:2015:i:1:p:62-77
    DOI: 10.1080/00779954.2013.851016
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    Cited by:

    1. Yukio Fukumoto & Tomoko Kinugasa, 2019. "How Different are demographic impacts on trade openness by geographic region?:Findings from Europe,Asia,America,and Africa," Discussion Papers 1912, Graduate School of Economics, Kobe University.
    2. Salim, Ruhul & Yao, Yao & Chen, George S., 2017. "Does human capital matter for energy consumption in China?," Energy Economics, Elsevier, vol. 67(C), pages 49-59.

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