ECON 251 - Lecture 13 - Demography and Asset Pricing: Will the Stock Market Decline when the Baby Boomers Retire?

Lecture 13 - Demography and Asset Pricing: Will the Stock Market Decline when the Baby Boomers Retire?

Overview

In this lecture, we use the overlapping generations model from the previous class to see, mathematically, how demographic changes can influence interest rates and asset prices. We evaluate Tobin's statement that a perpetually growing population could solve the Social Security problem, and resolve, in a surprising way, a classical argument about the link between birth rates and the level of the stock market. Lastly, we finish by laying some of the philosophical and statistical groundwork for dealing with uncertainty.

Assignment

Ross, Corporate Finance, chapter 5

Bodie, Finance, pp. 143-182

Course Media

Transcript

html

Audio

mp3

Low Bandwidth Video

mov [100MB]

High Bandwidth Video

mov [500MB]