Real Asset Returns and Demographic Effects: A Theoretical and Empirical Study

This book examines the relation between demographic factors and real asset returns, which has received little attention. We begin by discussing the implications of major growth models for this relationship. Then we propose a model to derive the testable equations which show us the explicit relation. Our results show that real asset returns are fairly significantly and positively affected by population growth, especially when the sample period is extended and long horizon span methods are used, although the size and power of the effect vary among samples and assets. We find the key channel through which demographics affect asset returns is the capital dilution caused by the population growth with the evidence from a cross section sample of forty-three countries and regions. Our results demonstrate the importance of examining the relationship between demographic variables and asset returns for economic policies and its role in the business cycle and other areas. The book will appeal to policy makers, researchers, and professionals interested in theoretical, applied, and policy issues related of demographics effects on financial markets.