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Vermögenspreise, Alterung und Ersparnis / Asset Prices, Aging and Saving: Gibt es einen demografisch bedingten „Asset Meltdown“? / Should We Expect an Asset Meltdown for Demographic Reasons?


  • Spahn Heinz-Peter

    () (Lehrstuhl Wirtschaftspolitik, Universität Hohenheim (520A), D-70593 Stuttgart, Germany)


In simple overlapping-generation models, the young save by purchasing assets from the old, who in turn finance their consumption by spending the proceeds. If household saving of a shrinking younger generation falls short of planned, constant asset sales by the old generation, asset prices might drop. This note argues that the above asset-meltdown argument holds only in case of a strict cash-in-advance constraint in a model with sharp demarcations between periods. Here, the shrinking size of the young generation establishes a supply-side constraint for production, and the old cannot realize the planned value of asset sales so that goods prices cannot be bidden up. In a more realistic setting of simultaneous and slow changes, only some flexibility and elasticity of the financial system is needed to resolve the cash-in-advance constraint. Excess goods demand then will produce rising prices. Then, necessarily additional savings (in the form of undistributed profits) arise as a flow-of-funds effect, which in turn help to maintain asset market equilibrium. Asset prices nevertheless might fall because of rising interest rates if monetary policy reacts to inflationary tendencies (if goods-supply constraints persist). But this line of reasoning is different from the shortage-of-saving myth.

Suggested Citation

  • Spahn Heinz-Peter, 2007. "Vermögenspreise, Alterung und Ersparnis / Asset Prices, Aging and Saving: Gibt es einen demografisch bedingten „Asset Meltdown“? / Should We Expect an Asset Meltdown for Demographic Reasons?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 227(1), pages 102-106, February.
  • Handle: RePEc:jns:jbstat:v:227:y:2007:i:1:p:102-106:n:7

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    References listed on IDEAS

    1. Raimond Maurer & Marcel Marekwica & Steffen Sebastian, 2006. "Asset Meltdown - Fact Or Fiction?," ERES eres2006_269, European Real Estate Society (ERES).
    2. Hans Fehr & Sabine Jokisch, 2006. "Demographischer Wandel und internationale Finanzmärkte," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(4), pages 501-517, November.
    3. James M. Poterba, 2001. "Demographic Structure And Asset Returns," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 565-584, November.
    4. 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.
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