Demographics and Interest Rates in Asia

Serkan Arslanalp, Jaewoo Lee and Umang Rawat

No 2018/172, IMF Working Papers from International Monetary Fund

Abstract: Demographic developments have been regarded as one important cause of the long-term movement in global interest rates. This paper provides empirical evidence of the relationship between demographics and interest rates over a wide sample of advanced and emerging market economies. It also finds that capital account openness limits the direct sensitivity of a country’s interest rates to its own demographics. The results suggest that future demographic developments will continue to apply downward pressure on the interest rates in Asia which foresees a rapid aging.

Keywords: WP; interest rate; real interest rate; rate of interest; demographics; interest rates; capital account openness; world interest rate; interest rate adjustment; dependency ratio; real interest rate increase; adjustment to saving; interest rate environment; aging speed; Real interest rates; Aging; Demographic change; Long term interest rates; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 23
Date: 2018-07-27
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Citations: View citations in EconPapers (1)

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