The Effect of Population Aging on Stock Prices in Korea

다국어 초록 (Multilingual Abstract)

This empirical study examines the relationship between population aging and stock prices using the Korean time-series data. The time-series properties of the variables are examined via the unit root and the cointegration test, and error correction model is estimated to investigate the effect of population aging on stock prices in Korea. The proportion of the elderly, aged over 65, to the working age population is used as a measure of population aging. The quarterly data sample covers the period from 1991 to 2020. The unit root test shows that the variables are difference-stationary, and the following cointegration test results indicate a long-run equilibrium relationship exists between population aging and stock prices. Based on the cointegration test result, an error correction model is constructed and estimated. The estimation result of the error correction model shows that the effect of population aging on stock price is statistically insignificant. Empirical results of this paper suggests that population aging would not have significant effect on stock prices in Korea, and the trend of population aging would not adversely affect the Korean stock market.