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.
•Effects of New Zealand's aging population on stock prices are explored.•A range of macroeconomic factors are considered (ignored in many studies).•Aging population does not appear to have a net effect on stock markets.•Real GDP and foreign-portfolio-investment positively affect stock prices.•Policy recommendations include increasing productivity and skilled-migration.