Baby Boom, Asset Market Meltdown and Liquidity Trap

Junning Cai

Macroeconomics from University Library of Munich, Germany

Abstract: A so-called “asset market meltdown hypothesis” predicts that baby boomers’ large savings will drive asset market booms that will eventually collapse because of the boomers’ large retirement dissavings. As good news to baby boomers, our analysis shows that this meltdown hypothesis is fundamentally flawed; and baby-boom-driven asset market booms may not necessarily collapse. However, bad news is that, in the case where meltdowns are about to happen, forward-looking baby boomers’ attempts to escape them will be futile and may lead the economy into a “liquidity trap”. (JEL E21, E22, E44, G12)

Keywords: baby boom; asset market meltdown; liquidity trap; investment elasticity (search for similar items in EconPapers)
JEL-codes: E21 E22 E44 G12 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2004-01-14
New Economics Papers: this item is included in nep-mac
Note: Type of Document - PDF; prepared on Win2000; pages: 37; figures: 3
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0401002

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