The Impact of Macroeconomic Influence on Retirement Investments: A Case Study of New Zealand

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