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| Tekijä: | Lim, K-M. Weil, D.N. |
| Otsikko: | The baby boom and the stock market boom |
| Lehti: | Scandinavian Journal of Economics
2003 : VOL. 105:3, p. 359-377 |
| Asiasana: | Stock markets Demography Population Growth Models |
| Kieli: | eng |
| Tiivistelmä: | This paper addresses two issues. The first is whether demographic change was plausibly responsible for the run-up in stock prices over the last decade, and whether an attempt by the baby boom cohort to cash out of its investments in the period 20102030 might lead to an "asset meltdown". The second issue is whether the rise in dependency accompanying the retirement of the baby-boom cohort calls for an increase in national saving. This paper analyzes these issues using a forward-looking macro-demographic model, and shows that they are related through the existence of installation costs for capital. If such costs are sufficiently large, then demographics do have the power to affect stock prices, but "saving for America's old age" is less optimal. However, conventional estimates of capital installation costs are not large enough to explain large stock price movements in response to actual demographic change. |
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