Precautionary Portfolio Behavior from a Life-Cycle Perspective

Carol C. Bertaut and Michael Haliassos ()
Additional contact information
Carol C. Bertaut: Board of Governors of the Federal Reserve System

Finance from EconWPA

Abstract: The literature on household asset accumulation draws a sharp distinction between "short-run" precautionary motives to buffer consumption from annual income shocks, and "long-run" life cycle considerations under income certainty. However, estimates of shock persistence imply considerable career uncertainty. We study long-run precautionary motives for life-cycle wealth accumulation and portfolios allowing for uncertain returns, incomes, and lifespan. We separate the effects of various factors on mean and median asset holdings, including education, risk aversion, household heterogeneity, bequests, impatience, variance and serial correlation of income shocks. Numerical solutions are compared with data from the 1992 Survey of Consumer Finances.

Keywords: precautionary saving; income risk; CCAPM; life-cycle models (search for similar items in EconPapers)
JEL-codes: G11 E21 E44 (search for similar items in EconPapers)
Date: 1996-04-19
Note: Type of Document - WordPerfect 5.1/5.2; prepared on IBM PC ; to print on HP; pages: 39; figures: request from author. Please note that the paper size is A4.
View list of references View citations in EconPapers

Downloads: (external link)
http://129.3.20.41/eps/fin/papers/9604/9604001.pdf (application/pdf)
http://129.3.20.41/eps/fin/papers/9604/9604001.html (text/html)
http://129.3.20.41/eps/fin/papers/9604/9604001.ps.gz (application/postscript)

Related works:
Working Paper: Precautionary portfolio behavior from a life-cycle perspective (1996)
Journal Article: Precautionary portfolio behavior from a life-cycle perspective (1997)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpfi:9604001

Access Statistics for this paper

More papers in Finance from EconWPA
Series data maintained by EconWPA ().