period. the price of psv assets is nearly four times higher in the globalization period ( period 3 ) than in the pre - globalization period ( period 2 ), leading to asset price inflation of 5. 28 % per annum. the number of young people in the market - economy world, who are saving for future retirement, increases substantially in the period of globalization. thus, we have a global “ savings glut, ” which leads to substantial asset price inflation globally. in the example of table 2. 3, the asset price inflation rate accelerated substantially, from 0. 89 % to 5. 28 % annually for twenty - five years. what will happen once the boom is over? let me extend table 2. 3 to include the postglobalization period, in table 2. 4. here the post - globalization period is represented by 2030, and all population figures are the united nations population estimates given in table 2. 1. if we look at period 4, the post - globalization period, we see that the market - economy world population will grow by only 0. 28 % annually from 2005 to 2030. under my simplified assumption, the young population in the market - economy world will produce about 2. 29 billion units of consumption goods, while there will be 100 million psv assets. this means the price of the assets will be about 22. 9 units of consumption goods in the postglobalization period, meaning that asset price inflation decelerates quite sharply. the asset price inflation of the post - globalization period is a mere 0. 28 %. in fact, the rate is lower even than the 0. 89 % of the pre - globalization period. summing up so far, i have suggested that the brute force of compositional change in population might be in the background of asset market bubbles and their subsequent bust, especially those which caused the global macroeconomic crisis of 2008 and after. to close this section, i would like to draw two observations from this exercise. first, i am not suggesting this demographic factor is the cause of the crisis, but pointing out that this favorable demographic background ( increasing inverse dependency ratio ) might have been fertile ground for the excessive optimism that led many economic agents to take a highly leveraged position to multiply their returns. by the same token, the eventual sharp reversal of the ratio made resolution of accumulated financial excesses particularly difficult, resulting in the prolonged, severe balance - sheet adjustment that followed the crisis, and which is still

2011, 14 i presented some telling figures on the correlation of financial crisis, or so - called bubbles, and the inverse dependency ratio in japan, united states, greece, portugal, spain, ireland and china. the figures were based on the 2008 revision of the united nations world population prospects. since then, the united nations has published its 2010 revision. this appendix updates these figures and expands on them by including more european and asian countries. the japanese inverse dependency ratio peaked around 1990, and it was in the very next year, 1991, that the japanese bubble peaked. the peak of the us ratio was between 2005 and 2010, and the peak of the us subprime bubble was 2007 ( figure a. 1 [ same as figure 1. 1 ] ). the economically troubled countries of the eurozone present a similar pattern to japan and the united states. the ratios for greece, portugal and spain have almost the same time profile, and all of them peaked around 2000 – 2005. the peak of the spanish property boom was just after the ratio ’ s peak, and the financial problems of greece also started at the same time. a particularly interesting case is ireland, which showed a sharp rise in the ratio until around 2005. the bursting of the country ’ s property market bubble was just a few years around the corner ( figure a. 2 ). how about other european countries? the so - called core europe, germany, france and italy, passed the peak 10 + years ago, and seemingly, did not have any particularly alarming property bubbles around 2010 ( figure a. 3 ). however, new and potential members of the eurozone show similar patterns to greece, spain, portugal, and ireland ( figure a. 4 ). their ratios peaked around 2005 – 2010, and some have their own problems. in contrast to advanced countries, emerging asia has shown remarkable resilience against the financial crisis of 2008. in fact, their inverse dependency ratio is still rising, as exemplified by china ’ s ratio ( figure a. 5 ). the inverse dependency ratios of many other asian countries have a quite similar time profile to that of china ( figure a. 6 ). however, their ascent will be checked in a relatively short period, and the peak will be around 2010 – 15 in many of these countries. after that, the ratio will fall as rapidly as it is now rising. see footnote 2. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’