Asset Prices, Capital Flows And Population Structure

In human history, never can people live so longer like today. Meanwhile, Increasing in proportion of the old-age population and the degree of the population ageing process also produce intermediate ageing effects on both the economy and the society. While increasing longevity and lower fertility also lead to the coming of ageing society.From the viewpoint of macroeconomic levels, this development lays burden on the government in the form of pension funds and expenditures on medical care. Worsening of the ageing problem may cause fiscal crisis.Owing to ageing problem now become an international challenge thing, there is still no a supernational organization that can find a solution to handle it.Changes in demographic structure directly give rise to reactions between the entity economy and the financial markets. This aspect of changes and levels already catches people's eyes on the reform pension system, many economic theroritical literatures have done much research regarding to this problem. Changes in demographic structure as a long-run economic phenomen,how it affects economic growth can be starting from economic phenomen.For example,when the society stays a certain stage of the ageing sociey,asset price and capital return may decline in a certain degree;Among those long term factors of international capital mobility,partly due to unharmonious changes in demographic structure; Dangers arising from ageing problem,to what exten,can be diversified and shared around the world; What we have mentioned above is the basic logic of our research.What we research mainly focus on .regional difference of ageing population trends, There are, however, important differences in the pace and degree of ageing. Under the situations of financial globalization, capital mobility increases greatly, investment and capital market becomes more integrated,ageing and reform of pension system can bring national economis long run and fundmental influences through factor flows across national bordrers,and this provides a new idea to find a solution for ageing problem. Under assumption of open economy model, this paper maily discuss relationships between demographic structure,asset price and capital flows, meanwhile, probe into global investment of pension funds.Considering regional difference of world-wide demographic structure and ageing pace in differnent regions, we continue our studies under conditions of open economy model, assume capital flows and migrations permitted, demographic structure (a nation,or a region) and ageing ratio as a variable through factor mobility,to a certain degree, can realize "younger"demographic structure and mitigate ageing pace, and it, in theory and practice, provides a feasible solution for ageing problem. Our paper considers capital flows only, and on the basis of this, the paper further our studies in three levels as follws:First level mainly discusses relations between demographic structure and asset price in a closed economy. Owing to asset price depends on capital's real return rate in long time, and relationship between demand and supply in short time. Therefore, the paper analyzes how demographic structure affects asset price in two aspects. By using over-lapping model, we first analyze savings, investment and consumptiong behaviors which are relating to demographic structure. Based on these factors' effects on economic growth and its "allocation effects" on capital and population, we draw a conclusion that demographic structure can cause changes in asset price ; on the hand, according to life-cucle hypothese,investor at different age stage has different preference towards different risks and returns in financial markets. Ageing can cause asset supply over demand at some future day, and also can drive asse prcie down. This section mainly gives proofs how ageing brings asset price change in a closed economy.Levelâ…¡being extended into an open economy model, ageing as a world wide trend, however, the pace and degree of ageing at different countries (or regions) are different, long term returns on pension funds also is different. Under assumptions of perfect capital mobility, capital flows from those fast ageing areas to those slow ageing areas, capital returns declines more slow. On the hand, in reality, pay-in and pay-out system still is the main model of pension system, under conditions of open economy, risks can be shared across world, so constructing a worl-wide risk-sharing mechanism in line with pay-in and pay-out system may be a solution to ageing problem.Levelâ…¢analyze mainly from economics of investment. Based on above-discussions about entity economy, in line with related literatures, we further study real situations of global investment of pension funds. The paper also studies the global investmen benefits and consraints of pension funds, we find that real investment level below expected level lies in restrictions on investment of pension funds across different countries. Increasing investment in foreign countries can increase pension fund returns or effectively diversify its risks. This section finally gives the major global investment vehicle of pension funds -sovereignty pension fund and sovereignty wealth fund-a comprehensive and comparative study, we put forward some policy suggestions.In summary,To study relations between demographic structure and capital,in attempating to gaining theoretical support of economics for global investment of pension funds,theories ang analysis tool used in the paper mainly including neo-classical economic growth theory, related theoretical model in international economics, and tools such as dynamic simulations and equilibrium analysis and the like,as to study approaches, I mainly use a OLG (overlapping generation) model so that the paper can study how the changes in population structure affects asst price in financial markets,capital flows and risk-sharing mechanism, of course, under different background and different assumptions, OLG model being extended.These approaches are mainly normative ways, without question, we also use emprical metods to probe into those activities in the real world.Finally, the further research trends have been pointed out in the last chapter of thedissertation.