Aging and Property Prices: A Theory of Very Long Run Portfolio Choice and Its Predictions on Japanese Municipalities in the 2040s

Yoshihiro Tamai, Chihiro Shimizu and Kiyohiko G. Nishimura

No 65, HIT-REFINED Working Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This paper investigates the effect of aging population on property (land) prices. A theory of very long run portfolio choice is developed for a transition economy from young and growing to rapidly aging population and applied to estimate property price inflation in Japanese municipal markets. The results are stunning. The simulation results in which income factors are assumed to be fixed at the 2005-2010 growth level suggest that the average residential property price (land price) in the Japanese municipalities may decrease as much as 19 percent from the present to 2020, 24 percent to 2030, and 32 percent to 2040.

Keywords: Aging; Asset Prices; Long Run Portfolio Choice; Constant Monetary Quantity (CMQ); Inflation Target (IT); Price Stability (search for similar items in EconPapers)
JEL-codes: G11 G12 J11 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2017-01
New Economics Papers: this item is included in nep-age and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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