Demographic Structure,Economic Cycle And Asset Price

The report of the 19 th CPC National Congress pointed out that the long-term prospects for China's economy are bright.However,in 2011,the inflection point of our country's demographic dividend emerged,and the demographic dividend which supports economic growth is gradually disappearing.The demographic structure of China is undergoing a tremendous transformation--the aging population is increasing.Changes in the demographic structure will cause a chain reaction in the financial market and the real economy.To a certain extent,macroeconomic variables such as savings,consumption,and investment are changed.The impact will be transferred to the supply and demand of various types of assets,triggering fluctuations in asset prices.As is wellknown,the demographic change is a long-term economic phenomenon,and it is a longterm factor that affects the fluctuation of asset prices.In the short term,the relationship between the demographic structure and the asset price will be influenced by the different stages of the economic cycle.The fluctuation of the asset price depends on the population in the long term and is determined by the economy in the short term.From this point of view,this article conducts a systematic and in-depth study of the relationship among population structure,economic cycle,and asset prices through a combination of theoretical analysis and empirical analysis.Firstly,this paper summarizes the current research achievements of domestic and foreign scholars on the relationship between demographic structure and asset prices.On this basis,the theoretical basis of population structure that influences asset prices is demonstrated.It mainly includes the construction of the intergenerational overlapping model at the macro level,the elaboration of the life cycle hypothesis at the micro level and the mechanism analysis based on the perspective of supply and demand.In addition,the evolutionary process of the theory of economic cycle is sorted out,and the specific transmission mechanisms that affect the asset prices at different stages of the economic cycle are analyzed.Secondly,this paper selects three representative assets: financial assets--stocks,physical assets--real estate,physical assets with both commodity and investment attributes-commodities,the impact of the demographic structure on the different kinds of assets price in China is tested.The regression results of time series data from 1992 to 2016 in China concerning demographic structure and stock price show that the proportion of the elderly population is negatively correlated with the yield of the Shanghai stock composite index.Based on the fixed effect model of China's provincial panel data from 2000 to 2016,finding that the rise in the population dependency ratio will lead to a decline in real estate prices.After the inflection point of the demographic dividend in 2011,the population structure will affect the demand for industrial products through the growth rate of GDP and the proportion of investment.The commodity prices represented by industrial products went down all the way.In summary,the deepening of the ageing population exerts downward pressure on asset prices,which is consistent with the theoretical analysis.In order to study the impact of the economic cycle on the relationship between population structure and asset prices further,this paper also uses HP filtering analysis method to divide China's post-1990 period into three economic cycles.The impact of the demographic structure on asset prices in China's economic uplink phase is investigated.At this point,the empirical results have changed and are no longer consistent with the life cycle hypothesis.When the economy is in good shape,the deepening of the ageing population leads to a rise in the price of assets.Finally,based on the research of the full text,we put forward corresponding policy suggestions from the two aspects of demographic structure and asset price.