Demography and Equity Premium

Wolfgang Kuhle ()
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Wolfgang Kuhle: Munich Center for the Economics of Aging (MEA), Postal: Amalienstr. 33, D-80799 Munich

No 8157, MEA discussion paper series from Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy

Abstract: This article comprises a tractable two-generations-overlapping, stochastic, neoclassical production economy, where government bonds are in positive net supply. In this framework we show that the entrance of larger (smaller) cohorts into the labor market will lead to an increase (decrease) in the risky and the riskless rate and to an increase (decrease) in the expected equity premium.

Date: 2008-02-15
New Economics Papers: this item is included in nep-dge
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