OECD Journal: Financial Market Trends

Frequency
Annual
ISSN: 
1995-2872 (online)
ISSN: 
1995-2864 (print)
http://dx.doi.org/10.1787/19952872
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The articles in Financial Market Trends focus on trends, structural issues and developments in financial markets and the financial sector.

Article
 

Revisiting the asset-meltdown hypothesis You do not have access to this content

English
 
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Author(s):
Sebastian Schich
07 Jan 2009
Pages:
19
Bibliographic information
No.:
16,
Volume:
2008,
Issue:
2
Pages:
1–14
http://dx.doi.org/10.1787/fmt-v2008-art16-en

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The present article focuses on the so-called "asset meltdown hypothesis", which postulates a direct link between demographic developments and the level of asset
prices. In particular, proponents of this hypothesis argue, when baby boomers start
entering retirement they will become net sellers of financial assets to finance retirement consumption. As subsequent generations are smaller in numbers, other things equal, this would put downward pressure on financial asset prices. Revisiting this hypothesis, there is some support for a link between demographics and financial asset prices, although the link may not be strong. A number of mitigating factors exist, so that "other things" will not be equal. A major question in this context is to what extent demographic developments and their implications for other variables affecting financial asset prices are already reflected in financial asset prices and how fast any additional pressures on financial asset prices will play themselves out.
 
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