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Population Aging and Aggregate Consumption in Developing Asia

Author

Listed:
  • Gemma Estrada

    (Asian Development Bank)

  • Donghyun Park

    (Asian Development Bank)

  • Arief Ramayandi

    (Asian Development Bank)

Abstract

One of developing Asia’s foremost structural economic challenges is the need to rebalance demand and growth toward domestic sources in the face of one of its most significant structural shifts—the demographic transition to an older population. The scope for investment-led growth may be quite limited, so the key to growth is stronger domestic demand, and the key to stronger domestic demand is greater consumption. We examined the impact of the old-age dependency ratio on the share of consumption in the gross domestic products of 31 developing Asian economies and 122 from outside the region from 1998 to 2007. In addition, we tested for a possible difference in its effect in the Asian economies relative to the rest of the sample. The analysis suggests a positive relationship between population aging and consumption though evidence for developing Asia was weaker than that for the rest of the sample. This implies that the aging population 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.

Suggested Citation

  • Gemma Estrada & Donghyun Park & Arief Ramayandi, 2011. "Population Aging and Aggregate Consumption in Developing Asia," ADB Economics Working Paper Series 282, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0282
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    Cited by:

    1. Lei He & Shuyi Zhou & Zilan Liu, 2020. "How is aggregate household consumption affected jointly by longevity, pension, and aging? Theory and evidence," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(4), pages 499-512, December.
    2. Sakiru Adebola SOLARIN, 2017. "The Stationarity of Consumption-Income Ratios: Nonlinear Evidence in ASEAN Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 109-123, June.
    3. Lei He & Shuyi Zhou & Zilan Liu, 0. "How is aggregate household consumption affected jointly by longevity, pension, and aging? Theory and evidence," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 0, pages 1-14.
    4. Keisuke Otsu & Katsuyuki Shibayama, 2016. "Population Aging and Potential Growth in Asia," Asian Development Review, MIT Press, vol. 33(2), pages 56-73, September.

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