IDEAS home Printed from https://ideas.repec.org/h/nbr/nberch/7399.html
   My bibliography  Save this book chapter

Price Expectations and Households' Demand for Financial Assets

In: Explorations in Economic Research, Volume 1, number 2

Author

Listed:
  • Lester D. Taylor

Abstract

The effects of price expectations on consumption and saving has received relatively little attention, especially at the micro level. This paper's effort is addressed to this void. More specifically, the paper's primary purpose is to investigate whether it is possible to discern empirically a relationship between individually held price expectations and decisions of households to hold particular types of assets. To this end, I have analyzed aggregate time - series data from the National Income Accounts and the Flow-of-Funds and two bodies of micro household data, each involving several thousand households and each containing fairly detailed information on price expectations.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Lester D. Taylor, 1974. "Price Expectations and Households' Demand for Financial Assets," NBER Chapters, in: Explorations in Economic Research, Volume 1, number 2, pages 258-339, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:7399
    as

    Download full text from publisher

    File URL: http://www.nber.org/chapters/c7399.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Pyle, David H, 1972. "Observed Price Expectations and Interest Rates," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 275-280, August.
    2. Robert J. Gordon, 1971. "Inflation in Recession and Recovery," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 2(1), pages 105-166.
    3. Stafford, Frank P & Dunkelberg, William, 1969. "The Cost of Financing Automobile Purchases," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 459-464, November.
    4. Philip Cagan, 1965. "The Effect of Pension Plans on Aggregate Saving: Evidence from a Sample Survey," NBER Books, National Bureau of Economic Research, Inc, number caga65-2, March.
    5. Saul H. Hymans, 1970. "Consumer Durable Spending: Explanation and Prediction," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 1(2), pages 173-206.
    6. A. Sandmo, 1970. "The Effect of Uncertainty on Saving Decisions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 37(3), pages 353-360.
    7. Eva Mueller, 1959. "Consumer Reactions to Inflation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 73(2), pages 246-262.
    8. Thomas J. Sargent, 1972. "Anticipated Inflation and the Nominal Rate of Interest," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 86(2), pages 212-225.
    9. Jerusalem D. Levhari & T. N. Srinivasan, 1969. "Optimal Savings under Uncertainty," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 36(2), pages 153-163.
    10. Thomas J. Sargent, 1973. "What Do Regressions of Interest on Inflation Show?," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 2, number 3, pages 289-301, National Bureau of Economic Research, Inc.
    11. Turnovsky, Stephen J, 1972. "The Expectations Hypothesis and the Aggregate Wage Equation: Some Empirical Evidence for Canada," Economica, London School of Economics and Political Science, vol. 39(153), pages 1-17, February.
    12. Mirman, Leonard J, 1971. "Uncertainty and Optimal Consumption Decisions," Econometrica, Econometric Society, vol. 39(1), pages 179-185, January.
    13. F. Thomas Juster & Paul Wachtel, 1972. "Inflation and the Consumer," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 3(1), pages 71-122.
    14. Gibson, William E, 1970. "Price Expectations Effects on Interest Rates," Journal of Finance, American Finance Association, vol. 25(1), pages 19-34, March.
    15. Robert J. Gordon, 1970. "The Recent Acceleration of Inflation and Its Lessons for the Future," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 1(1), pages 8-47.
    16. Turnovsky, Stephen J., 1969. "A bayesian approach to the theory of expectations," Journal of Economic Theory, Elsevier, vol. 1(2), pages 220-227, August.
    17. Paul Wachtel, 1972. "A Model of Interrelated Demand for Assets by Households," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 1, number 2, pages 129-140, National Bureau of Economic Research, Inc.
    18. Turnovsky, Stephen J & Wachter, Michael L, 1972. "A Test of the "Expectations Hypothesis" Using Directly Observed Wage and Price Expectations," The Review of Economics and Statistics, MIT Press, vol. 54(1), pages 47-54, February.
    19. F. Thomas Juster & Paul Wachtel, 1972. "A Note on Inflation and the Saving Rate," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 3(3), pages 765-778.
    20. Hayne E. Leland, 1968. "Saving and Uncertainty: The Precautionary Demand for Saving," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(3), pages 465-473.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paul Wachtel, 1977. "Survey Measures of Expected Inflation and Their Potential Usefulness," NBER Chapters, in: Analysis of Inflation: 1965–1974, pages 361-402, National Bureau of Economic Research, Inc.
    2. Jean-Louis Combes, 1996. "Epargne de précaution et stabilisation optimale des prix des produits agricoles d'exportation," Revue Économique, Programme National Persée, vol. 47(4), pages 983-994.
    3. Levenko, Natalia, 2020. "Perceived uncertainty as a key driver of household saving," International Review of Economics & Finance, Elsevier, vol. 65(C), pages 126-145.
    4. Eeckhoudt, Louis & Schlesinger, Harris, 2008. "Changes in risk and the demand for saving," Journal of Monetary Economics, Elsevier, vol. 55(7), pages 1329-1336, October.
    5. Susanne Soretz, 2003. "Stochastic Pollution and Environmental Care in an Endogenous Growth Model," Manchester School, University of Manchester, vol. 71(4), pages 448-469, July.
    6. Mark Huggett, 2004. "Precautionary Wealth Accumulation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(3), pages 769-781.
    7. Alain Bensoussan & Jussi Keppo & Suresh P. Sethi, 2009. "Optimal Consumption And Portfolio Decisions With Partially Observed Real Prices," Mathematical Finance, Wiley Blackwell, vol. 19(2), pages 215-236, April.
    8. Huggett, Mark & Ospina, Sandra, 2001. "Aggregate precautionary savings: when is the third derivative irrelevant?," Journal of Monetary Economics, Elsevier, vol. 48(2), pages 373-396, October.
    9. Dimitrios Varvarigos & Keith Blackburn, 2005. "Growth, Uncertainty and Finance," Money Macro and Finance (MMF) Research Group Conference 2005 12, Money Macro and Finance Research Group.
    10. Ton S van den Bremer & Frederick van der Ploeg, 2013. "Managing and Harnessing Volatile Oil Windfalls," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(1), pages 130-167, April.
    11. Atreya Chakraborty & Mark Kazarosian, 1999. "Portfolio Allocation of Precautionary Assets: Panel Evidence for the United States," Boston College Working Papers in Economics 432, Boston College Department of Economics.
    12. Wulff, Alexander & Heinemann, Maik, 2015. "Idiosyncratic Risk, Borrowing Constraints and Financial Integration - A Discussion of Ambiguous Results," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113165, Verein für Socialpolitik / German Economic Association.
    13. Maik Heinemann & Alexander Wulff, 2015. "Idiosyncratic Risk, Borrowing Constraints and Financial Integration - A Discussion of Ambiguous Results," Working Papers 2015019, Berlin Doctoral Program in Economics and Management Science (BDPEMS).
    14. Varvarigos, Dimitrios, 2008. "Sustained output growth under uncertainty: A simple model with human capital," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1468-1478, December.
    15. Kotaro Tsuru, 2000. "Finance and Growth: Some Theoretical Considerations and a Review of the Empirical Literature," OECD Economics Department Working Papers 228, OECD Publishing.
    16. Koulovatianos, Christos & Mirman, Leonard J. & Santugini, Marc, 2009. "Optimal growth and uncertainty: Learning," Journal of Economic Theory, Elsevier, vol. 144(1), pages 280-295, January.
    17. Daria Pignalosa, 2019. "On the role of the utility function in the estimation of preference parameters," Metroeconomica, Wiley Blackwell, vol. 70(4), pages 793-820, November.
    18. Benjamin M. Friedman, 1978. "Price Inflation, Portfolio Choice, and Nominal Interest Rates," NBER Working Papers 0235, National Bureau of Economic Research, Inc.
    19. Bar Light, 2018. "Precautionary Saving in a Markovian Earnings Environment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 138-147, July.
    20. K Blackburn & A Pelloni, 2001. "On the Relationship Between Growth and Volatility in Learning-by-Doing Economies," Centre for Growth and Business Cycle Research Discussion Paper Series 01, Economics, The University of Manchester.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:7399. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.