The Effects of Aging on Municipal Bond Issuance Based on ordinary least squares

The least square method is widely used in many fields of data processing, such as error estimation, uncertainty, system identification and prediction. It can find the best function matching by minimizing the sum of squares of errors. In this paper, the least square method is used to investigate the impact of population aging on municipal bond issuance in China. The research results show that: The aging population may be affecting municipal bond issuance through three channels: tax revenue, pension costs, or healthcare funding. We used mediation effects to find out that healthcare funding is a channel of impact. By robustness check, we confirmed that demographics of the previous year could be used to predict bond issuance of the present year. Our findings mark some possible financial challenges municipal governments face or will face during a period of a rapidly aging population.