Ageing population and gross savings of ASEAN-5

The world’s population is ageing. The problems with an ageing population are a decline in savings and uncertainty of the effect of ageing on savings over time. This paper examines the impact of the growth of the population aged 65 and above on savings in ASEAN-5. The annual gross savings and the growth of the population aged 65 and above are retrieved from the World Development Indicator database for the sampling period between 1975 to 2020. The autoregressive distributed lag (ARDL) estimation technique is employed to study the impact of the growth in the population aged 65 and above on savings in ASEAN-5. The novelty of this study is twofold. First, this study refers to the Life Cycle Hypothesis (LCH) to examine the short and long-run effects of the growth of the population aged 65 and above on the gross savings of ASEAN-5 economies. Second, this paper evaluates a time-varying 40 + k sub-sample period to gauge the impact of an ageing population on savings over time. This paper found that the growth in the population aged 65 and above had a significant and persistent impact on the gross savings of Indonesia over time. Nonetheless, the growth of the population aged 65 and above did not affect the gross savings of ASEAN-5 in the short run. The population aged 65 and above affected the gross savings of Indonesia and Singapore the most in the long run.