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Population ageing, household portfolios and financial asset returns: A survey of the literature

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  • Marianna Brunetti

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Abstract

Population ageing is a recognised phenomenon affecting many countries in the world including most EU ones, Japan and US. The financial implications of this phenomenon can be manifold and some recent literature has focused in particular on the possible consequences of ageing on household portfolios and on main financial asset returns ones. Overall, the extant literature on household portfolios reports a significant effect of age on asset allocation, thereby providing evidence in favour of the standard life-cycle hypothesis. On the other hand, empirical results on the link between demographics and financial asset prices/returns are less uniform. The aim of this paper is to systematize the extant literature on these issues and to provide an overview of the main results reported so far, trying to evaluate whether the different conclusions reached depend on the approach taken in the empirical exercises rather than on the actual differences, in terms of demographic dynamics, public pension systems and financial markets, of the realities considered.

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Bibliographic Info

Paper provided by Universita di Modena e Reggio Emilia, Facoltà di Economia "Marco Biagi" in its series Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) with number 07051.

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Length: pages 42
Date of creation: May 2007
Date of revision:
Handle: RePEc:mod:wcefin:07051

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Keywords: population ageing; household portfolios; financial asset returns;

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  1. Martin Browning & Annamaria Lusardi, 1995. "Household Saving: Micro Theories and Micro Facts," Department of Economics Working Papers 1995-02, McMaster University.
  2. Guiso, Luigi & Jappelli, Tullio, 2000. "Household Portfolios in Italy," CEPR Discussion Papers 2549, C.E.P.R. Discussion Papers.
  3. James Banks & Tanner, S, 2000. "Household portfolios in the UK," IFS Working Papers W00/14, Institute for Fiscal Studies.
  4. Tullio Jappelli, 1999. "The Age-Wealth Profile and The Life-Cycle Hypothesis: a Cohort Analysis with a Time Series of Cross-Sections of Italian Households," CSEF Working Papers 14, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  5. Andrew B. Abel, 2001. "Will Bequests Attenuate The Predicted Meltdown In Stock Prices When Baby Boomers Retire?," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 589-595, November.
  6. James M. Poterba & Andrew Samwick, 2001. "Household Portfolio Allocation over the Life Cycle," NBER Chapters, in: Aging Issues in the United States and Japan, pages 65-104 National Bureau of Economic Research, Inc.
  7. Alessie, R.J.M. & Hochgürtel, S. & Soest, A.H.O. van, 2000. "Household Portfolios in the Netherlands," Discussion Paper 2000-55, Tilburg University, Center for Economic Research.
  8. David E. Bloom & David Canning, 2004. "Global Demographic Change: Dimensions and Economic Significance," NBER Working Papers 10817, National Bureau of Economic Research, Inc.
  9. James Poterba & Steven Venti & David A. Wise, 2007. "The Decline of Defined Benefit Retirement Plans and Asset Flows," NBER Working Papers 12834, National Bureau of Economic Research, Inc.
  10. Andrew B. Abel, 2003. "The Effects of a Baby Boom on Stock Prices and Capital Accumulation in the Presence of Social Security," Econometrica, Econometric Society, vol. 71(2), pages 551-578, March.
  11. Bloom, David E. & Canning, David & Mansfield, Richard K. & Moore, Michael, 2007. "Demographic change, social security systems, and savings," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 92-114, January.
  12. Author-Name: John Geanakoplos & Michael Magill & Martine Quinzii, 2004. "Demography and the Long-Run Predictability of the Stock Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 241-326.
  13. Kedar-Levy, Haim, 2006. "Can baby-boomers' retirement increase stock prices?," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(2), pages 284-299, May.
  14. Carol Bertaut & Martha Starr-McCluer, 2000. "Household portfolios in the United States," Finance and Economics Discussion Series 2000-26, Board of Governors of the Federal Reserve System (U.S.).
  15. James Poterba, 2004. "The Impact of Population Aging on Financial Markets," NBER Working Papers 10851, National Bureau of Economic Research, Inc.
  16. James M. Poterba, 2001. "Demographic Structure And Asset Returns," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 565-584, November.
  17. Cutler, D.M. & Poterba, J.M. & Sheiner, L.M. & Summers, L.H., 1990. "An Aging Society: Opportunity Or Challenge," Working papers 553, Massachusetts Institute of Technology (MIT), Department of Economics.
  18. repec:fth:harver:1490 is not listed on IDEAS
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Cited by:
  1. Chiara Pederzoli & Costanza Torricelli, 2010. "A parsimonious default prediction model for Italian SMEs," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 10061, Universita di Modena e Reggio Emilia, Facoltà di Economia "Marco Biagi".
  2. Marianna Brunetti & Costanza Torricelli, 2010. "Demographics and asset returns: does the dynamics of population ageing matter?," Annals of Finance, Springer, vol. 6(2), pages 193-219, March.
  3. Elisabetta Gualandri, 2011. "Basel 3, Pillar 2: the role of banks’ internal governance and control function," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 11091, Universita di Modena e Reggio Emilia, Facoltà di Economia "Marco Biagi".

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