International Finance Discussion Papers - Precautionary Portfolio Behavior from a Life-Cycle Perspective (Paperback)

The literature on asset accumulation by households draws a sharp distinction between "short-run" precautionary motives to buffer annual consumption from annual labor income shocks, and "long-run" life cycle considerations under labor income certainty. However, empirical estimates of the persistence of shocks to annual incomes imply that households are subject to considerable career uncertainty. We study long-run precautionary motives for life-cycle wealth accumulation and portfolio choice. We compute optimal portfolios under three sources of uncertainty (stock returns, incomes, and lifespan), and explore the separate contributions of several key factors for mean and median asset holdings, including education, risk aversion, household heterogeneity, utility from bequests, time preference, and variance and serial correlation of income shocks. Numerical solutions for households in three education groups are compared with data from the most recent and comprehensive source, the 1992 Survey of Consumer Finances.

General

Imprint:	Bibliogov
Country of origin:	United States
Release date:	February 2013
First published:	February 2013
Authors:	Carol C. Bertaut
Dimensions:	246 x 189 x 3mm (L x W x T)
Format:	Paperback - Trade
Pages:	48
ISBN-13:	978-1-288-73441-2
Categories:	Books > Social sciences > Politics & government > General Promotions
LSN:	1-288-73441-7
Barcode:	9781288734412

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