Abstract
Aging has complex effects on the markets for real capital — capital used in the production of goods and services, and housing capital. If elderly people save less than younger people, an aging society saves less. This should increase interest rates since supply of funds gets tight. At the same time, the younger generation becomes ever smaller, so there is also less demand for new investment. The equilibrium effect is thus uncertain.
I would like to thank Alexander Ludwig and Mathias Sommer who have done most of the hard work underlying this contribution. Financial support from the Deutsche Forschungsgemeinschaft, the Volkswagen Foundation, the Gesamtverband der Deutschen Versicherungswirtschaft and the state of Baden-Württemberg is gratefully acknowledged.
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Börsch-Supan, A. (2008). The Impact of Global Aging on Capital Markets and Housing. In: Hamm, I., Seitz, H., Werding, M. (eds) Demographic Change in Germany. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-68137-3_4
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