The Long-run and short-run impacts of China's aging population on economic growth

Abstract

In recent years, China's economic growth has slowed down and entered a new economic normal. One of the main reasons for China's economic slowdown is population ageing and the disappearance of the demographic dividend, a phenomenon that poses a great challenge to China's economic development. Therefore, it is of great theoretical and practical significance to explore the relationship between population aging and economic growth. In this study, annual data from 1970 to 2020 have been selected for evaluation. This study investigates the link between economic growth and population ageing in a nonlinear autoregressive distributed lag (NARDL) framework. The results of the nonlinear autoregressive distributional lag model indicate that in the short run, there is a significant effect between positive and negative changes in economic growth and population ageing, particularly positive changes in the average annual growth rate of Gross National Product (GGDP) and negative changes in per capita Gross Domestic Product (PGDP). In the long run, there is no significant effect between changes in economic growth and population ageing, suggesting that other factors may be more important in the long run. Therefore, policy recommendations could focus on how to respond to population ageing through short-term economic policies and consider other factors that may affect population ageing in the long run, such as health and pension policies.