## Demographics and Interest Rates in Asia

_IMF Working Papers, July 27, 2018_

## Source details

**Canonical URL:** [Demographics and Interest Rates in Asia](https://www.imf.org/en/publications/wp/issues/2018/07/27/demographics-and-interest-rates-in-asia-46116)

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- [Markdown version](/en/publications/wp/issues/2018/07/27/demographics-and-interest-rates-in-asia-46116/index.md)
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## 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

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### 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.

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## Content in this bundle

- **Demographics and Interest Rates in Asia, WP/18/172, July 2018**
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_Source: https://www.imf.org/en/publications/wp/issues/2018/07/27/demographics-and-interest-rates-in-asia-46116_