The Effect of Shifting Wealth Ownership on the Term Structure of Interest Rates
Substantial shifts in wealth ownership from individuals to pension funds are currently taking place in the United States and also are in prospect for the foreseeable future. Moreover, pension funds typically exhibit portfolio preferences that are markedly different from those of individuals. In a world of heterogeneous investors, redistributions among wealth holders with different portfolio preferences will in general alter the structure of asset yields. Partial-equilibrium simulation experiments based on a model of the U. S. long-term bond market indicate that redistributions of saving flows from individuals to pension funds, in plausible magnitudes, can have major effects on the term structure of interest rates.
|Date of creation:||May 1980|
|Date of revision:|
|Publication status:||published as Friedman, Benjamin M. "The Effect of Shifting Wealth Ownership on the Term Structure of Interest Rates: The Case of Pensions." Quarterly Journal of Economics, Vol. XCIV, No. 3, (May 1980), pp. 567-588.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
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