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Boomer retirement: headwinds for U.S. equity markets?

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Author Info

  • Zheng Liu
  • Mark M. Spiegel

Abstract

Historical data indicate a strong relationship between the age distribution of the U.S. population and stock market performance. A key demographic trend is the aging of the baby boom generation. As they reach retirement age, they are likely to shift from buying stocks to selling their equity holdings to finance retirement. Statistical models suggest that this shift could be a factor holding down equity valuations over the next two decades.

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File URL: http://www.frbsf.org/publications/economics/letter/2011/el2011-26.html
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File URL: http://www.frbsf.org/publications/economics/letter/2011/el2011-26.pdf
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Bibliographic Info

Article provided by Federal Reserve Bank of San Francisco in its journal FRBSF Economic Letter.

Volume (Year): (2011)
Issue (Month): aug22 ()
Pages:

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Handle: RePEc:fip:fedfel:y:2011:i:aug22:n:2011-26

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Related research

Keywords: Stockholders ; Stocks - Rate of return ; Population aging ; Retirement;

References

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  1. John Geanakoplos & Michael Magill & Martine Quinzii, 2002. "Demography and the Long-run Predictability of the Stock Market," Cowles Foundation Discussion Papers 1380, Cowles Foundation for Research in Economics, Yale University.
  2. Alexander Ludwig & Dirk Krüger, 2006. "On the Consequences of Demographic Change for Rates of Returns to Capital, and the Distribution of Wealth and Welfare," MEA discussion paper series 06103, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  3. Lansing, Kevin, 2005. "Inflation-Induced Valuation Errors in the Stock Market," Journal of Financial Transformation, Capco Institute, vol. 13, pages 124-126.
  4. Robin Brooks, 2002. "Asset-Market Effects of the Baby Boom and Social-Security Reform," American Economic Review, American Economic Association, vol. 92(2), pages 402-406, May.
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Cited by:
  1. Hiroshi Fujiki & Naohisa Hirakata & Etsuro Shioji, 2012. "Aging and Household Stockholdings: Evidence from Japanese Household Survey Data," IMES Discussion Paper Series 12-E-17, Institute for Monetary and Economic Studies, Bank of Japan.
  2. Takáts, Előd, 2012. "Aging and house prices," Journal of Housing Economics, Elsevier, vol. 21(2), pages 131-141.

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