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Life cycle investment behavior, demographics, and asset prices

IP.com Disclosure Number: IPCOM000128050D
Original Publication Date: 1998-Dec-31
Included in the Prior Art Database: 2005-Sep-14
Document File: 4 page(s) / 19K

Publishing Venue

Software Patent Institute

Related People

Bergantino, Steven M: AUTHOR [+3]

Related Documents

http://theses.mit.edu:80/Dienst/UI/2.0/Describe/0018.mit.theses/1998-246: URL

Abstract

This thesis investigates the relationship between demographics and asset prices. More specifically it examines the effect of changes in the age distribution of the U.S. population on housing, stock, and bond prices over the post World War II period in the U.S. This is done in two steps. First, survey data on household asset holdings is used to construct age profiles of household demand for housing, stocks, bonds, and debt. These asset demand profiles are combined with data on the age distribution of the U.S. population to construct time series measures of aggregate demographic demand for housing, financial assets net of debt, and stocks in excess of bonds, which are then used to analyze the effects of demographically driven changes in aggregate asset demand on equilibrium asset prices over the period from 1946 through 1997. The results of this exercise suggest several interesting findings.

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Life Cycle Investment Behavior, Demographics, and Asset Prices

by

Steven M. Bergantino
B.A. Economics, Yale University (1989) M.A. Economics, Yale University (1992) Submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy at the Massachusetts Institute of Technology September 1998


(C) Steven M. Bergantino, MCMXCVIII. All rights reserved.

The author hereby grants to MIT permission to reproduce and distribute publicly paper and electronic copies of this thesis document in whole or in part.

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Department of Economics June 1998

CERTIFIED BY: [[SIGNATURE OMITTED]]

Jerry A. Hausman John and Jennie S. MacDonald Professor of Economics Thesis Supervisor James M. Poterba
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Peter Temin Elisha Gray 11 Professor of Economics Chairman, Departmental Committee on Graduate Students
ARCHIVES MASSACHUSETTS INSTITUTE OF TECHNOLOGY LIBRARIES OCT 16 1998

Massachusetts Institute of Technology Page 1 Dec 31, 1998

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Life cycle investment behavior, demographics, and asset prices

Life Cycle Investment Behavior, Demographics, and Asset Prices

by

Steven M. Bergantino

Submitted to the Department of Economics on June 1998, in partial fulfillment of the requirements for the degree of Doctor of Philosophy

Abstract

This thesis investigates the relationship between demographics and asset prices. More specifically it examines the effect of changes in the age distribution of the U.S. population on housing, stock, and bond prices over the post World War II period in the U.S. This is done in two steps. First, survey data on household asset holdings is used to construct age profiles of household demand for housing, stocks, bonds, and debt. These asset demand profiles are combined with data on the age distribution of the U.S. population to construct time series measures of aggregate demographic demand for housing, financial assets net of debt, and stocks in excess of bonds, which are then used to analyze the effects of demographically driven changes in aggregate asset demand on equilibrium asset prices over the period from 1946 through 1997. The results of this exercise suggest several interesting findings.

With respect to the microeconomic issue of life cycle investment behavior, one finds that the scale and composition of household asset demand changes dramatically over the course of the economic life cycle. Young households, that is, households with heads under age 40, tend to draw credit out of financial markets, primarily by issuing mortgage contracts for the purchase of houses. The extent of this and other borrowing done by young households tends...