Population Aging and Aggregate Consumption in Developing Asia

Abstract

This paper examines the effect of old-age dependency ratio on the share of consumption in gross domestic product, and test for a possible difference of this relationship in Asian economies relative to the rest of the world. The findings suggest that the positive effect of the old-age dependency ratio on consumption share in Asia is weaker than that for the rest of the world, implying that the aging population in Asia may not be contributing as significantly to robust consumption and domestic demand as it does in the rest of the world. In order to rebalance their economies, developing Asian governments must therefore continue to pursue a wide range of policies to promote stronger domestic demand.