Demographics and Interest Rates in Asia

IMF Working Papers, July 27, 2018

Source details

Canonical URL

Demographics and Interest Rates in Asia

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Serkan Arslanalp, Jaewoo Lee, Umang Rawat
• Published: July 27, 2018
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781484370308.001

Summary

• Demographic developments have been regarded as one important cause of the long-term movement in global interest rates.
• This paper provides empirical evidence of the relationship between demographics and interest rates over a wide sample of advanced and emerging market economies.
• The paper finds that capital account openness limits the direct sensitivity of a country’s interest rates to its own demographics.
• The results suggest that future demographic developments will continue to apply downward pressure on the interest rates in Asia which foresees a rapid aging.

Key findings and empirical results

• Demographics are an important determinant of long-term movements in global interest rates.
• Capital account openness reduces the direct sensitivity of a country’s interest rates to its own demographic changes.
• Future demographic developments in Asia, characterized by rapid aging, are expected to exert downward pressure on interest rates in the region.

Policy implications and considerations

• Policymakers in Asia should account for the downward pressure on interest rates arising from demographic trends, particularly rapid aging.
• The degree of capital account openness can alter how domestic demographics translate into domestic interest rates; policy choices on capital account openness will therefore affect interest rate dynamics.

Content in this bundle

• Demographics and Interest Rates in Asia, WP/18/172, July 2018
  • Demographics and Interest Rates in Asia, WP/18/172, July 2018 (Markdown version)
  • Demographics and Interest Rates in Asia, WP/18/172, July 2018 (PDF)