Will Bequests Attenuate The Predicted Meltdown In Stock Prices When Baby Boomers Retire?

Andrew Abel

The Review of Economics and Statistics, 2001, vol. 83, issue 4, 589-595

Abstract: General equilibrium models that predict a reduction in asset prices when baby boomers retire typically assume that people consume all of their wealth before they die. However, many people hold substantial wealth when they die. I develop a rational expectations, general equilibrium model with a bequest motive. In this model, a baby boom increases stock prices, and stock prices are rationally anticipated to fall when the baby boomers retire, even though consumers continue to hold assets throughout retirement. The continued high demand for assets by retired baby boomers does not attenuate the fall in the price of capital. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Date: 2001
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Working Paper: Will bequests attenuate the predicted meltdown in stock prices when baby boomers retire? (2001)
Working Paper: Will Bequests Attenuate the Predicted Meltdown in Stock Prices When Baby Boomers Retire? (2001)
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