This paper focuses on the effects of an aging population on
financial asset (stocks and bonds) returns in the U.S. for the
post-World War II period. The first part of the paper provides a brief review of demographic changes that will confront a selected country during the next half century. The next part presents a review of the empirical literature on demographics and
financial asset demands. Next, the paper develops a conceptual framework for analyzing how an aging population triggered by
falling birth rates and rising life expectancies affects the demand for financial assets. A discussion of the ideal data set and an outline of the challenges that arise in estimating how population aging will alter aggregate demand follows. Next, the paper builds up the actual models used in this paper and discusses actual data and proxies. Finally, the paper presents new findings and tests empirically the relation between aging and asset returns in the U.S. The conclusion summarizes the main findings and notes areas for future study. Outline The Demographic Transition in the U.S. and Other Nations Theoretical Background and Literature Review Conceptual Model Ideal Data Actual Model Results and Analysis