Front Matter Page
© 2018 International Monetary Fund
WP/18/172
IMF Working Paper
Asia and Pacific Department
Demographics and Interest Rates in Asia
Prepared by Serkan Arslanalp, Jaewoo Lee, and Umang Rawat 1
Authorized for distribution by Ranil M. Salgado
July 2018
Contents
Abstract
I. Introduction
II. Real Interest Rates and Demographic Change
III. Model Specification and Results
IV. Conclusions
Figures
1. Selected Asia: Change in 10-Year Government Yield
2. World Real Interest Rates
3. Selected Asia: Real Neutral Interest Rates
4. Asia: Fertility, Life Expectancy and Population Growth.
5. Asia and the Rest of the World: Change in Working-Age Population
6. Number of Years for the Old-Age Dependency to Increase from 15 to 20 Percent.
7. Pairwise Bivariate Plots.
8. Selected Asia: Impact of Demographics on 10-Year Real Interest Rates.
Tables
1. Descriptive Statistics
2. Correlation Matrix.
3. Panel Regression: Demographics and Long-Term Interest Rates.
4. Panel Regression: Demographics and Long-Term Interest Rates.
5. Alternative Specifications: Demographics and Long-Term Interest Rates.
6. Panel Unit Root Tests
7. Long Horizon Evidence on Demographic Structure and Real Rates.
References
The research behind this paper was mostly conducted while three authors were in the Asia and Pacific Department, and the early version was presented in the IMF's 2017 Regional Economic Outlook: Asia Pacific. The authors thank, without implicating, the comments and suggestions from many colleagues including Ken Kang, Gian Maria Milesi-Ferretti, Changyong Rhee, and Ranil Salgado. The authors thank Ursula Wiriadinata and Qianqian Zhang for excellent research assistance. All errors and misinterpretations are those of the authors.