Bridge over ocean
1 January 2012 Financial Analysts Journal Volume 68, Issue 1

Demographic Changes, Financial Markets, and the Economy

  1. Robert D. Arnott
  2. Denis B. Chaves

Using a large sample of countries and 60 years of data, the authors found a strong and intuitive link between demographic transitions and both GDP growth and capital market returns. Unlike previous researchers, who used ad hoc and restrictive demographic variables, the authors imposed a smooth and parsimonious polynomial curve across all age groups. They also performed robustness checks and produced forecasts for the coming decade, with all the necessary caveats.

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