Dec

22

Today the US census reported slower growth in population. Over the past few years, Japan has experienced flat or declining population growth.

Here is a regression of contemporaneous annual return in Nikkei (1944-2009) and annual population change:

Regression Analysis: nik chg versus pop chg

The regression equation is
nik chg = 0.0801 + 6.22 pop chg

Predictor     Coef  SE Coef     T      P
Constant    0.080    0.0489  1.64  0.107
pop chg      6.223    3.863   1.61  0.112

S = 0.296056   R-Sq = 4.0%   R-Sq(adj) = 2.4%

The slope coefficient is not significant, but there is a positive correlation between stock prices and population growth (as shown by the loose correlation plot).

This may not be the correct lag to check: why would population change and stock returns correlate in the same year (except for wives the following year in Connecticut)? Birthrate should decline as a population ages, and to the extent that assets are sold more to finance the consumption of pensioners than new parents.

 


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