TY  - JOUR
AU  - Constantinides,George M.
AU  - Donaldson,John B.
AU  - Mehra,Rajnish
TI  - Junior is Rich: Bequests as Consumption
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11122
PY  - 2005
Y2  - February 2005
UR  - http://www.nber.org/papers/w11122
L1  - http://www.nber.org/papers/w11122.pdf
N1  - Author contact info:
George M. Constantinides
The University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL  60637
Tel: 773/702-7258
Fax: 773/753-8045
 (773) 753-8045
E-Mail: gmc@ChicagoBooth.edu

John B. Donaldson
Columbia Business School
3022 Broadway, Uris Hall
New York, NY 10027-6902
Tel: 212/854-3401
E-Mail: jd34@columbia.edu

Rajnish Mehra
Department of Economics
W. P. Carey School of Business
Arizona State University
PO Box 879801
Tempe, AZ  85287-9801
Tel: 480 965-6335
Fax: 480 965-0748
E-Mail: rajnish.mehra@asu.edu
AB  - We explore the consequences for asset pricing of admitting a bequest motive into an otherwise standard overlapping generations model where agents trade equity and perpetual debt securities. Prices of securities are seen to be approximately 50% higher in an economy with bequests as compared to an otherwise identical one where bequests are absent. Robust estimates of the equity premium are obtained in several cases where the desire to leave bequests is modest relative to the desire for old age consumption.
ER  -