Baby Boom, Population Aging, and Capital Markets

Authors

  • Gurdip S. Bakshi University of New Orleans
  • Zhiwu Chen University of Wisconsin-Madison

DOI:

https://doi.org/10.1016/1057-0810(95)90023-3

Abstract

This article tests how demographic changes affect capital markets. The life-cycle investment hypothesis states that at an early stage an investor allocates more wealth in housing and then switches to financial assets at a later stage. Consequently, the stock market should rise but the housing market should decline with the average age, a prediction supported in the post-1945 period. The second hypothesis that an investor’s risk aversion increases with age is tested by estimating the resulting Euler equation and supported in the post 1945 period. A rise in average age is found to predict a rise in risk premiums. Journal ofBusiness, 1994,67(2): 165-202. (Reprinted with permission of the Journaf of Business.)

Published

1995-06-30

How to Cite

Bakshi, G. S., & Chen, Z. (1995). Baby Boom, Population Aging, and Capital Markets. Financial Services Review: The Journal of Individual Financial Management, 4(1), 62–63. https://doi.org/10.1016/1057-0810(95)90023-3

Issue

Vol. 4 No. 1 (1995): Financial Services Review

Section

Abstracts of Articles on Individual Financial Management

License

Copyright (c) 1995 JAI Press Inc.

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