Research On The Effect Of The Age Structure Of Population To The Real Effectiv Exchange Rate

There are lots of factors which affect the real exchange rate including real interest rate,the economic growth rate,production rate,the level of fiscal deficits and The terms of trade and so on.This paper attempts to study the real effective exchange rate from the point of view of population age structure.Firstly,the paper general theoretical analysis that how the population age structure affects the real effective exchange rate;secondly the paper makes an empirical age structure affects the real effective exchange rate.This paper selected 35 years of annual panel data from the global 42 countries which include 21 countries of high income level and 21 countries of middle and low income countries from 1980 to 2014.the empirical finding,the way that population age structure affects real effective exchange rate is mainly composed of consumption structure mechanism from the demand side and "Balassa-Samuelson" mechanism from the supply side,the effects of current account mechanism from the demand side are faint.Among them,the shares of working age have important negative impact on real exchange rate through consumption structure mechanism and positive impact through "Balassa-Samuelson" mechanism.The shares of working age has important negative impact on real exchange rate,because the positive effect of “Balassa-Samuelson” mechanism is greater than the negative effect of the consumption structure mechanism.By dividing different income level,this paper analyses the consumption structure mechanism and "Balassa-Samuelson" mechanism.And the empirical findings: labor force affects the real effective exchange rate through the consumption structure mechanism in high income countries is more obvious than low levels of countries.The impacts of "Balassa-Samuelson" mechanism are very obvious,regardless of the income level of countries.In addition,this paper found that the fertility rate has important positive impact on real exchange rate.And compared to the countries of low income level,the positive influence is more obvious in high income countries.