Demographic Impact on Financial Markets

This paper contains information that is not to be shared, copied, disclosed or otherwise compromised without the consent of the authors. Demographics have major impact on economy and financial markets. Because work ability and consumption pattern of different age groups are law of nature, population and its structure represent a more fundamental force beyond politics and other economics. When birth rate, mortality rate and life span are constant in time, the change of generations is smoothed out, and no demographic impact can be felt. On the other hand, if there is a burst in birth rate, like the ＂Baby Boomers＂, strong ＂demographic wave＂ will manifest itself in the economy as well as politics. Such moves are driven by the law of nature and cannot be stopped by other forces. Therefore, in order to understand financial markets, one has to study economics with the perspective of demographics.

Demographic Impact on Financial Markets