This study investigates how aging populations affect stock prices in New Zealand, in particular, the
effect of the 50-64 cohort moving from their peak investment decade into disinvestment from a dynamic
perspective by considering fast- and slow-moving institutional changes for the period 1991-2017. A
scientific LASSO approach is used to select macroeconomic variables which affect stock prices. The
findings suggest that fast-moving institutional changes are mostly associated with unexpected market
shocks rather than policy changes in terms of timing. Furthermore, there exists a long-run relationship
between stock prices and aging population with the influence of other macroeconomic factors.
However, aging population does not affect stock prices negatively, rejecting the predictions of LifeCycle
and Permanent Income Hypotheses. The findings reveal that policies seeking to mitigate a stockmarket
meltdown may be superfluous if the macroeconomic factors (such as real GDP and money
supply) are ignore
