Aging, asset markets, and asset returns: A view from Europe to Asia

Axel Börsch-Supan, Alexander Ludwig

Research output: Contribution to journalArticlepeer-review

9 Scopus citations


The extent of the demographic changes is dramatic especially in some Asian and European countries. This paper investigates the effect of aging on global asset markets and asset returns, focusing on markets for productive capital, and especially on interactions between European and Asian economic development. Aging has complex effects on the markets for real capital. If elderly people save less than younger people, interest rates will increase. At the same time, however, the younger generation becomes smaller, which reduces the demand for new investment. The equilibrium effect is thus uncertain. Our multicountry computational equilibrium model delivers a subtle picture: there will be some decline in the return from productive capital, but it is relatively small. We find noticeable interaction effects between labor market and pension reforms in Europe on the one hand, and the demographic and economic developments in Asia, especially India and China, on the other hand.

Original languageEnglish
Pages (from-to)69-92
Number of pages24
JournalAsian Economic Policy Review
Issue number1
StatePublished - 2009
Externally publishedYes


  • Aging
  • Labor market reform
  • Labor supply reactions
  • Pension reform


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