The Study On The Impact Of Population Structure On The Real Effective Exchange Based On Panel Data Model

In the 21st century,countries don't only focus on the economic development,but also began to pay more attention to the coordinated development between economic with political,social,cultural and other areas.Demography is an important branch of sociology.It mainly researches the interrelationships between population development with social,economic and ecological environment.In recently years,population issues have become the focus of researches.Before the issues appeared,literatures which researched the connection between the population structure and economic are less than before.The population structure can be divided into two parts,the one is the age of population structure,and the other one is the sex of population structure.The age of population structure is generally divided into the labor force,the young children and the older.The sex of population structure is classified by gender-scale structure.Population structure can affect the development of economic,by the consumption and the investment.At the same time,changes in population structure will have an impact on the real exchange rate.The real exchange rate is the nominal exchange rate excluding inflation factors.It can reflect the actual competitiveness of country's goods in foreign markets.It is very important to find out what factors can affect the real exchange rate because the real exchange rate has a huge impact on the national economy by the balance of payments,import and export trade and so on.Researches about the decision theory of real exchange rate is quite plentiful.There are many theories such as interest rate parity theory,purchasing power parity theory and so on.But the literature from the perspective of population structure is still less.Firstly,the background and significance of this paper,ideas and structures,the innovation and researches have been described.And the literature about the topic are summarized briefly.The transmission mechanism between the population structure and the real exchange rate have been divided into two parts.The first part is the age of population structure and the other part is the sex of population structure.The transmission mechanism about the age of population structure have two kinds,the supply and the demand.The demand one include the structure of demand mechanisms and the current account mechanisms.The supply one include the Balassa-Samuelson effect and the endowment effect.The transmission mechanism of sex of population structure is fertility rate mechanism and family transmission.Then,by the empirical models we can know the effect of population structure on the real exchange rate,and analysis results.This paper use Statal3 as a tool.The datas which are used come from WDI database.The data are annual from 91 countries from 1980 to 2014.A static panel model and dynamic panel GMM model are uesd to estimate the regression equation.Explained variables are the real effective exchange rate index.Explanatory variables are the labor force proportion,the sex ratio,the dependency ratio,taking into account the fertility of sex ratio and considering the time effect of the age of population structure.Control variables are GDP per capita growth rate,government final consumption to GDP ratio,real interest rates,inflation rates and terms of trade.The reasult show that the proportion of the lab force,the proportion of the female and the real effective exchange rate have the same direction of changes.The proportion of the lab force and the proportion of femals is increasing,the real effective exchange rate is also increasing.When explanatory variables is the dependency ratio,empirical results show that the real effective exchange rate and the dependency ratio in the same direction.That the increased number of non-labor force population are more than the labor force is the main reason.After considering the fertility rate,the empirical result of static and dynamic panel shows that increased number of babies in the short-term will have a positive effect on the real effective exchange rate,but have a negative effect in the long-term.After considering the time effect,the empirical results show that the impact of the labor force to the real effective exchange rate decreases with time.The major reason is the transformation of the global economy industrial production patterns.Before the transformation,industrial production activities depend on the number of labor force.But now it depend on capital and technology.Visible,the age and sex of population structure have an impact on the real exchange rate in the short and long term.Therefore,the government should not just focus on a single factor in the economic field and also should pay more attention to the population structure.