Abstract
This paper suggests a methodology with which to analyse the influence of population structure on real exchange rate (RER) under the premises of the life cycle hypothesis. The methodology involves deriving a simple overlapping generation model following Obstfeld and Rogoff (1996) and then develops an estimable model in order to examine the impact of population structure on RER in an open economy. Data on a panel of 24 countries over 1980-2006 period is used in empirical estimation of the model. The paper finds that young and old dependents have significant appreciating and depreciating effect on RER, respectively. Although not significant, share of working age population has a depreciating effect on RER