 Will the shift to stocks and bonds by households be destabilizing?Economic Review, 1994, vol. 79, issue Q II, 44 pages Abstract: In the last decade, households have tended to shift out of bank deposits and money market funds and into stocks and bonds. Some analysts and journalists worry that the shift could be destabilizing to the economy and financial markets. Consumption spending, it is argued, might fluctuate more because households have invested in riskier stocks and bonds. Financial markets also could be more volatile because households might behave as short-sighted novices who will sell assets in panic at the first dip in the market. In addition, the pension and mutual funds through which households invest tend to trade more actively than households. The increasing role of such heavy traders, it is feared, might increase financial market volatility.> Morgan argues that these concerns, though understandable, are exaggerated. Households appear to be saving for retirement and are therefore likely to ride out short-term bumps in the market. Moreover, the market role of institutional investors has been trending up for 30 years without any accompanying trend in volatility. Keywords: Stocks; Saving and investment; Consumer behavior (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fip:fedker:y:1994:i:qii:p:31-44:n:v.79no.2 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in Economic Review from Federal Reserve Bank of Kansas City Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.