How Will Persistent Low Expected Returns Shape Household Economic Behavior?

Vanya Horneff, Raimond Maurer and Olivia Mitchell

No 25133, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Many believe that global capital markets will generate lower returns in the future versus the past. We examine how persistently lower real returns will reshape work, retirement, saving, and investment behavior of older persons using a calibrated dynamic life cycle model. In a low return regime, workers build up less wealth in their tax-qualified 401(k) accounts versus the past, claim social security benefits later, and work more. Moreover, the better-educated are more sensitive to real interest rate changes, and the least-educated alter their behavior less. Interestingly, wealth inequality is lower in periods of persistent low expected returns.

JEL-codes: D14 D91 G11 G22 (search for similar items in EconPapers)
Date: 2018-10
New Economics Papers: this item is included in nep-age and nep-dge
Note: AG LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as How Will Persistent Low Expected Returns Shape Household Economic Behavior? , Vanya Horneff, Raimond Maurer, Olivia S. Mitchell. in Incentives and Limitations of Employment Policies on Retirement Transitions , Clark and Newhouse. 2019
Published as Vanya Horneff & Raimond Maurer & Olivia S. Mitchell, 2019. "How will persistent low expected returns shape household economic behavior?," Journal of Pension Economics and Finance, vol 18(04), pages 612-622.

Downloads: (external link)
http://www.nber.org/papers/w25133.pdf (application/pdf)

Related works:
Journal Article: How will persistent low expected returns shape household economic behavior? (2019)
Chapter: How Will Persistent Low Expected Returns Shape Household Economic Behavior? (2018)
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: https://EconPapers.repec.org/RePEc:nbr:nberwo:25133

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w25133

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().