Population composition and financial markets: evidence from Japan

Abstract

Purpose

This study aims to examine the relation between population composition and financial market variables in post-war Japan.

Design/methodology/approach

Cointegration and Granger causality tests are applied to annual data for the period 1948-2015.

Findings

Accounting for nonstationarity, this study finds long-run equilibrium relations between real financial price (stock and house) indices and the proportion of population in the prime earning (45-64) or retirement (65+) age. Granger causality tests that account for possibly nonstationary variables find some evidence of dynamic causation running from the 45-64 cohort to the real financial price indices. No such evidence is found for the 65+ cohort.

Originality/value

This study complements the existing literature primarily based on US data with analysis of Japanese data that has some unique population composition features.

Citation

Kawakatsu, H. and Oliver, M. (2018), "Population composition and financial markets: evidence from Japan", Studies in Economics and Finance, Vol. 35 No. 4, pp. 505-524. https://doi.org/10.1108/SEF-07-2017-0187